What are CFDs?
CFDs which are more commonly known as Derivatives, allow traders to gain exposure to markets without owning the underlying asset.
- A CFD is an agreement between a trader and a CFD broker to exchange the difference in the value of a financial product.
- CFD traders do not own the asset but instead receive a profit or loss based on the price change of the underlying asset.
- An advantage of trading a CFD is that you can access the underlying assets at a lower cost than buying the asset outright by using leverage.
What is Forex?
The foreign exchange market, also known as the Forex Market, is a global marketplace for exchange-traded currencies.
Forex trading is the simultaneous act of buying one currency while selling another.
The Forex markets are open 24 hours a day, 5 days a week and trade over $7 Trillion per day.
Long & Short
By trading CFD’s you have the option to trade the financial markets whether they are falling or rising by placing Long or Short orders.
A Long, or a long position, refers to the purchase of an asset with the expectation it will increase in value, giving it a bullish attitude.
A Short, or a short position, refers to the purchase of an asset with the expectation it will decrease in value, giving it a bearish attitude.
Leverage allows traders to access more than their current balance by putting down a percentage of this which is represented as Used Margin. This allows traders to trade and access markets they simply would not have otherwise been able to.
What’s leverage?
Leverage
Risk Management
As CFDs are leveraged products you can gain or lose much larger amounts compared to your initial investment and your losses can exceed your deposits.
Understanding risk management is a core part of becoming a successful trader which is why we have created our extensive knowledge base to help you gain a better understanding of how to manage risk and take your trading to the next level.
