Why trading cfd is a good starting point
The commitment between the two parties provides for an exchange of that financial flow deriving from the difference in the price of the underlying between the time of opening the contract and the closing one. In simpler words, thanks to CFDs you can earn by replicating the trend of an asset and taking advantage of its price changes. This approach can be applied to different assets, from cryptocurrencies, to actions, up to raw materials. CFD trading can also be managed on the Forex market.
Let’s go into more detail by explaining better how it works on a practical level. It all starts when the trader opens his position, which can be up or down. The closing of the contract by difference occurs clearly when it closes it.
The gain obtained derives from the difference in price of the asset between the time of opening and that of closing.
What are the benefits? You will no doubt have realized that, thanks to CFD trading, you can trade without buying any goods. This is indicative. In the case of cryptocurrencies, for example, if you buy you must take into account a strong volatility. To understand it better, just think of the strong changes that involved the price of Bitcoin between 2017 and 2018.
With CFDs this problem is bypassed. In fact, when one operates, one does not actually possess the asset but only one derivative thereof. What matters, in fact, is just to open the right position between long and short, guessing the trend of the asset itself. Although the trader is not actually in possession of the CFD as it may be for a purchased share, trading is objectively very simple.
Furthermore, when discussing CFD trading, it is important to remember that these instruments do not expire. The trader, therefore, can keep the position open as long as he wants. It must however take into account the presence of small fees that must be paid to the broker in case of maintaining the position during the night hours.
Trading Cfd is a large topic and for more information you can check the course prepared by the guys on tradingmasters.io who did a good job to explain some of the most important stuff like leverage, stop loss and take profit in their lessons.