cfds – Leveraging CFD Trading Example
For example, a lever of 1:20 allows to negotiate on shares for a value of 1000 euros with only 50 euros. Margin and leverage rates may vary depending on the broker and the type of financial instrument used.
Ultimately, CFD’s allow you to have access to a wide range of actions, which you can’t do through a regular bank. You can create a portfolio of stock CFDs by choosing components from thousands of shares around the world, listed on all major stock markets. Not only Italian actions, therefore, but also numerous European, Asian and American actions.
In addition to stocks, CFDs allow for upward and downward negotiation on multiple financial instruments such as currencies, commodities, ETF funds and indexes of various kinds.
Trading CFD on Forex
Forex CFDs allow you to operate on the currency market, then open upward or downward positions on currency pairs such as EUR/USD, USD/JPY, EUR/GBP and many more. The advantages of Forex trading with CFDs include the high leverage offered by brokers (around 1:200) and spreads, which are more advantageous than other financial instruments.
The less the spread, that is the difference between the purchase price and the sale of the CFD, the more convenient it is to open a position on a financial instrument. About Forex CFD Trading It should also be noted that the famous MetaTrader 4 professional trading platform is optimal for this type of financial instrument, although more difficult to use than others (eg. Plus500).
READ ALSO: What is the spread?
Trading CFD’s on commodities
Commodity CFDs allow trading on oil, gold, silver, copper, natural gas and other types, such as food (soy, coffee, sugar, cotton, etc.). Even for raw materials the financial levers proposed by the brokers are usually very high. Since the quotes of some very volatile raw materials, before trading with real funds we recommend a preventive study of the raw material that you want to negotiate.
Trading CFD on ETFs
The CFD’s on ETFs have as the underlying of Exchange traded fund-type funds. These are special funds whose securities are exchanged as shares and are marked by high liquidity and low management costs. CFD’s allow you to swap them upward and downwards in a simple way and with a good variety of funds.
Trading CFD on Indexes
Index CFDs usually refer to the stock market indices of stock markets, such as the Dow Jones, the FTSE MIB of Piazza Affari, or the Frankfurt Stock Exchange, but also to Mid-Cap type indices, which enclose the equity stocks of average capitalization . Brokers allow the same way to trade on indexes of other kinds, such as the VIX Index, the volatility index, and others.