CFD Trading is becoming more and more popular and important. There are many reasons for that. One of the major reasons is that it’s not enough to buy and sell stocks anymore. In these times with high volatility and stocks indices losing 5 % a day just to break even on the next day, it’s crucial to find a good opportunity to profit from this volatility. CFD Trading just gives you that option. You can buy or sell stocks or indices just with a couple of mouse clicks and a small investment. You don’t have to ask your bank if you can lend a few stocks to sell them later (this is the classical approach to profit from bearish markets). You just have to pick one of the best CFD brokers, make a deposit and then you can start trading. Just like Forex trading, you have can use a leverage, which gives you the opportunity to profit even from small price movements and corrections. That being said, CFD Trading offers a lot of opportunities you should be aware of.
Picking the right CFD broker
Forex is more popular than CFD Trading and this should be the reason why there are more Forex broker than CFD broker. If you’re looking for a market leading CFD broker you have to take a closer look while you should already be aware of the major Forex brands (like eToro) that exist. Not every Forex broker offers the opportunity to trade with CFDs. Although it’s pretty easy for a broker to expand their offerings, not a lot do it. Some Forex brokers want to stick to their core competencies and dismiss this chance. So we recommend signing up at one of the major CFD brokers out there are and not to wait for a good Forex broker that offers CFDs in addition.
We’re working on an extensive review for CFD brokers but we’d like to present one of them from the start: Plus500. This is a broker that is designated for experienced traders. With CFDs, you can trade currencies, stocks, commodities or indices. Click here to read our Plus500 review or
(your capital may be at risk)
Heding with CFD
CFDs are a great chance to hedge your investments. For example if you invested $ 20.000 in common stocks or have a Dow Jones ETF, that means that you’re vulnerable for high volatile markets. When there’s a recession or another crisis you will lose a lot of money – at least in the short term. It’s not uncommon to see your investment decreasing by 10% in value within one week. This is a yield you usually make within a whole year. It’s extremly painful but you have to accept it when you want to invest in risky stocks like that. Well, not really. CFDs give you a great option to save your investment and survive any crisis or even make money with it, because you can also earn money when stocks are falling.
When you think there’s a chance something might happen that stocks will drop, you can sell individual stocks or indices like Dow Jones with only a small amount of money at a CFD broker. You don’t have to invest another $20.000 to hedge your investment. You can use a leverage of let’s say 1:100. In this case you only have to invest $200 and when the Dow Jones loses 10% (bring you a loss of $2000), you will earn $2000 on your CFD investment. Even though the index you’re invested in drops by 10%, you wont make any loss at all. Just by investing another $200.