Why use CFDs in your daily trading?
Contracts for Difference or CFDs open up a whole new world for traders.
Many traders use CFDs daily, because unlike other tradable instruments, CFDs are a simple, cost-effective way to trade across an extensive range of markets powered by greater access due to leverage. Let’s take a look.
Key Characteristics of CFDs
There are two key characteristics of CFDs that make them suitable for daily trading.
The first is Greater accessThis approach to trading was once restricted only for institutional traders or large accounts as leverage carries additional risk, especially if market volatility and position size are not carefully considered. Now times have changed and through platforms such as Pepperstone, the everyday trader can take advantage of leverage, accessing market movements they previously weren’t able to unless trading options or futures which have their own complexities.
The ability to hold more positions at onceCFDs allow trades without holding the underlying asset, meaning, the trader is simply expressing a directional play on the market over a duration of their choosing without actually having to own the underlying asset.
Four Key Advantages of CFDs
For those who watch the clock, there are four key advantages.
- Greater leverage means you can take up more positions; however note that greater leverage carries increased risk and will require attention to position sizing
- Low cost. For the active trader CFDs can be incredibly cheap vehicles to trade the world's financial markets
- With such an extensive range of markets - many trading 24 hours - wherever the move takes place, you never miss an opportunity
- Flexibility - You can simultaneously hold long and short positions in order to capitalise on bull and bear markets.
Learn more about trading CFDS
Here at Pepperstone, our customers love the product range along with the low cost to trade and the fact so many markets are open around the clock. Interested? Watch the more videos to learn or speak to our team about whether CFDs are right for you.