A CFD, or contract for difference, is an agreement that allows traders to profit from price movements without owning the underlying asset.
The contract reflects the difference in value of an asset between the time a position is opened and when it is closed. If the price moves in your favour, you receive the difference; if it moves against you, you pay the difference.
Trading CFDs means you are speculating on price movement rather than buying or selling the asset itself.
CFDs provide access to a wide range of instruments from a single trading platform and allow traders to use flexible risk management tools.
Leverage enables traders with smaller capital to participate in markets, while the ability to trade long or short allows profit in both rising and falling markets.
CFDs also allow hedging by opening opposing positions on the same asset.
A long position refers to buying an asset in expectation that its price will rise, while a short position involves selling an asset in anticipation that its price will fall.
If the market moves against the position taken, the trade will result in a loss.
Traders often describe their market view as being long or short on an asset.
Stop loss and take profit are instructions that automatically close a trade at predefined price levels.
Stop losses limit risk, while take profits secure gains. These orders can be added when opening or modifying a trade.
Stop orders use market execution and may not be filled at the exact specified price due to volatility.
Stop pending orders open a trade automatically once the market reaches a specified level, expecting price continuation.
Buy stop orders are placed above the market price, while sell stop orders are placed below.
All stop pending orders are executed using market execution.
Limit pending orders are used when a trader expects a price reversal at a specific level.
Buy limits are placed below market price, while sell limits are placed above it.
Limit orders are executed using limit execution at the requested price or better.
CFD trading allows speculation on price movements without owning the asset.
Traders can go long or short, use stop loss and take profit orders, and plan trades in advance using pending orders.
