Inexperienced Investors and CFD trading

by Mike on September 28, 2012

CFD trading


CFD Trading: Is it a Viable Trading Model for Inexperienced Investors?


The amount of information accessible on the World Wide Web is almost incomprehensible, with a whole host of text based and audio visual resources that educate users on any number of individual topics. This has dramatically widened the boundaries of possibility for everyday citizens, who are able to attempt and achieve far more than in previous generations.


Operating in the open financial markets provides an example of this, as while it was once exclusive to professional traders it is now a viable money making options for independent or aspiring investors. With this in mind, the most important decision that an aspiring trader must take is to select the most suitable investment vehicle.


CFD Trading: A Potentially Lucrative Trading Method for Inexperienced Investors


From the sizeable list of potential markets and options, CFD trading stands as one of the most enduringly appealing. This is because there are numerous benefits that CFD traders offers over other investment methods, each of which is particularly suited to those who are new to the financial markets. Consider the following: –


ñ  There is no Burden of Ownership: Like forex or spread betting, CFD trading is a margin based method of trading. Essentially, it relies upon an agreement between two parties to exchange the difference between the opening and closing prices of a contract, which means that you do not assume ownership of an underlying financial instrument. This distinguishes CFD’s as derivative products, which affords trader significantly lower risk and increased flexibility in terms of buying and selling.


ñ  You Can Profit in a Falling or Depressed Market: The liquidity and leverage available through this investment method is significant, which in turn allows traders to minimize their losses and even profit in a falling market. Should external conditions create a hostile trading environment, traders can either hedge their portfolio to offset any potential losses, or even sell short with a view to making a sizeable profit. This is an ideal benefit for inexperienced traders, who are keen to invest in a less restrictive and stable market.


ñ  You can Gain Access to a Wider Range of Markets: CFD trading is not only a flexible trading vehicle, but it is also one that affords you access to more than 10,000 individual financial markets. This provides you with a great deal of exposure, and entry into markets that you would not be able to trade in otherwise. Another facet of CFD trading that enhances your sense of freedom is that it’s capacity to deliver significant interest repayments, as the absence of a fixed expiry date allows you to close your position whenever you choose to do so.


In Summary: Making CFD Trading Work for you


These benefits certainly distinguish CFD trading as a viable and flexible investment method, especially for inexperienced traders who are looking to make their presence felt in the open financial markets. The capacity to negate potential loss and even profit in a falling market is particularly appealing, as are the margin influenced financial gains that can be made from just a single transaction. In short, CFD trading offers an excellent opportunity to new or independent traders, and provides them with a platform from which they can make immediate financial returns.


***Photo thanks to Seth.W***

{ 1 comment… read it below or add one }

1 Shawn @ PipsToday November 27, 2012 at 11:21 pm

Thanks Mike to share a useful and informative article about CFD trading. I am planning to invest in CFD trading and therefore was searching for CFD and came through on your blog. I find all things here that was searching since last some weeks.

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