Finance

Things that CFD Trader South Africa Should Know before Start Trading

In trading, there are many kinds of trading instruments that can be picked. Everyone can have their own personal preferences regarding the instrument. However, instruments such as forex, stock, and the currently-hype cryptocurrency have become popular options among the traders and investors. Of course, there are still more options other than these three instruments. CFD or contract for difference is one of them. Some people may not be familiar with this, but it is interesting instrument to try. Even, some beginners of cfd trader south africa can start their journey. Of course, it is important to know more about the CFD before start trading.

CFD is trading instrument it looks like stocks. The trading process is quite similar to stock, but CFD does not involve the ownership of stock or assets. In fact, in CFD, the trade focuses on the movement or changes of price in the financial assets. The traders can gain profit in this trading instrument based on their decision in analyzing and even predicting the movement and changes of price in the financial assets. Price difference or spread will be determined based on the opening and closing position. Opening position is in the trade’s entry while closing position is in the exit points. Normally, CFD is only for short term so it is quite different from stocks that can be kept to gain profits from the shares.

It is important to note that there is no perfect trading instrument. Thus, there are pros and cons in every trading instrument, including in CFD. It is very important especially for beginners so they will not take too many risks. In CFD, it is popular with its high leverage. However, using high leverage can become risky because when the trade does not work well, the trader should be ready to deal with the huge loss because of the borrowed funds based on the leverage. Of course, one of its pros is about its fast profit. As what is mentioned, CFD works in short term so it does not need to wait for long time to gain the profits. There are also wide ranges of market in CFD, including the commodities and currency pairs.

However, one of the cons is related to its face pace. It requires good analyses to make the decision in the short time. Its high leverage is also benefits, but it can bring serious problems when it is not calculated properly because it can bring serious loss when it is not handled can managed properly. Then, high volatility is quite common in CFD so it makes things quite hard to analyze and predict. The price movement can be unexpected so traders should be ready with the problems.

In case traders look for other alternatives of trading instrument, forex can become choice and oanda com can become one of the nice trading platform for forex trading. OANDA is registered in USA and it was founded in 1996. It has long experiences and journey to assist the traders in trading, especially forex so it is quite reliable enough. Moreover, OANDA is regulated by FCA or UK Financial Conduct Authority. It even won the Best Forex Trading Technologies from UK Forex Award and Best Trading Platform from FX Week. These show its reliability in delivering trading services.

Related posts

How are mutual funds taxed?

Nick Jacob

KEY FACTORS TO CONSIDER WHEN CHOOSING A BITCOIN WALLET

Nick Jacob

What did the Evergreen Wealth Formula Care for Users?

Nick Jacob