What is CFD Trading and How Can I Get Involved?

Trading on the stock market can be a very rewarding experience for anyone who is willing to take a risk, not just for making a substantial amount of profit but also for gaining valuable knowledge and mastery over time. Investing in stocks is a perfect choice for those who want to minimize their risks and are looking into long-term gains. But if you want to participate in short-term, high-risk and high-reward trading strategies, then CFD trading might be a great option for you.

What is CFD trading?

CFD or Contract for Difference trading, as its name suggests, is a mode of trading wherein two parties agree on a contract based on the difference of the prices of a particular asset from the time the contract was opened until the moment that it is closed. CFD trading allows investors to speculate based on the movement of the prices of different markets including shares, currencies, indices, bonds, and commodities. This simply means that traders can benefit not only from going long on a bullish market but also from shorting on declining markets.

What are the advantages?

There are also a number of other reasons why people prefer CFD trading over other forms of trading. As stated before, traders may opt to go short to compensate for potential losses in terms of the value of their physical investments. Another advantage is that people can start with a smaller amount of money to be able to secure a much larger position at the end of the contract period. Depending on where the market is based, the government may not require stamp duties on CFD trades, saving you tons of money from in the long run.

While CFD trading is attractive and is a quick and easy way to grow your money, the truth is it is not suited for everyone. The contracts usually last for only a few days or weeks, unlike in long-term investments.  It also involves higher risks compared to other forms of trading since having a huge opportunity to gain profit will also mean a possibility for bigger losses.

How can I get involved in CFD trading?

Another great thing about CFD trading is that traders have the freedom to participate in thousands of different markets they want. With the advantages and some of the risks mentioned in the previous paragraphs, it will be of benefit to beginners to start with demo platforms first. Once you have mastered the fundamentals and fully understood the risks involved in CFD trading, the next step is to find the best trading provider for you.

TradeDirect365 is one of the most experienced and most trusted CFD trading providers in Australia. They provide instant demo platforms to their clients and they take pride in their incredibly low trading fees, unmatched by any other service providers. Low trading costs and fixed daily spreads mean better returns and fewer deductions for you. By using TradeDirect365, you can also gain access to more than 400 different shares listed on ASX, all of which you can short trade.

Furthermore, you can also improve your trading knowledge and skills by using free educational resources from their database. Sign up now and get up to $500 as a welcome bonus.