Most people during the New Year proudly go by “new year, new me” and for traders, we think it should go a little like “new year, new market.” Because nothing amps up your chances of gaining than expanding your portfolio.
Expanding your portfolio, at the same time only taking on trades you can handle is a game changer. This mitigates risk and loss, expands your means of gaining and keeps you growing as a trader. And if you haven’t thought of a market to get into just yet, then keep reading!
Below are reasons why CFD trading is ideal to consider taking on this 2024!
What is CFD Trading?
CFD stands for Contact of Difference and regardless of your degree of experience, you have undoubtedly heard about CFD trading! (even if you just have a basic understanding of it.) But to help you understand what this is, it’s derivative financial instruments.
This financial instrument can allow you to speculate on its market price movements. One thing that’s great about CFD trading, you can speculate on various financial assessments (like stocks, commodities, currencies and more) without really owning anything physically.
And whether the market is bearish or bullish, you can still benefit from both as long as your speculations fall accurate. So you can say, it’s a flexible way to trade and how it works technically, traders initiate a trade by signing up with a broker. This broker then determines the difference between the asset’s entry and exit prices. Following that, the trader records this difference as a profit or loss.
Why is CFD Trading Beneficial?
There are various reasons why this trade is beneficial but to make it quick and easy for you to see how advantageous it is, here is a run down to consider:
1 – It’s pretty liquid!
One of this trade’s best qualities is that it’s liquid and for any trader or investor, that’s a win. Now if you wonder how beneficial a high liquidity market is, here is a list of reasons to consider: (1) the potential of tighter bid-ask spreads, (2) more efficient trading, (3) smoother transactions, (4) minimizes the impact if large orders on market prices, (5) provides a more stable trading environment and lastly (6) cheaper trading fees.
To put it simply, the high level of liquidity seen in well-known CFD markets is essential to provide traders with ideal trading conditions and a dynamic marketplace.
2 – Leverage, leverage–LEVERAGE!
While leverage may also be viewed as a drawback, savvy traders understand how to make use of it to their advantage. Basically, how leverage works in your favour (in trade) is when you start with a relatively small amount of capital and gain big. So what leverage does is it amplifies the potential profit, even if your capital is small.
3 – Enjoy a wider pool of diverse asset classes
As you may already know, CFD trading can allow you to trade in various asset classes! So with this trade, you can expect diversification at its finest. This can give you tons of great opportunities to gain and also a great way to diversify and expand your portfolio. So whether you’re into stocks, commodities, currencies and so on, it’s available in CFDs.
4 – You can gain from both bearish and bullish markets
So no matter if that market is bearish or bullish, you can count on CFD trading to make it possible for you to still profit from it. All you need to do in your send is to know when to go long or go short.
What we mean by go long is buying and for go short, it’s selling. Knowing how to efficiently know what move to go for is your part as a trader. Things that can help you with that decision are analytical tools, a good trading strategy and (if you’re a novice trader) advice from experts.
5 – It’s open 24/5!
Don’t you just love a market that never sleeps? In CFD trading, you’ll be able to trade any time of the day, well except on weekends but overall, this gives you ample time to trade during the week. This provides traders flexibility and allows them to trade whenever it’s convenient for them.
6 – No physical ownership of the underlying asset
Another convenient thing about this is that traders do not genuinely possess the underlying asset. For those who wish to speculate on price changes without the obligations and expenses of ownership, this may be beneficial.