Why Trade CFDs?
In recent years, CFDs have become the most popular way for online investors to trade commodities, currencies and stocks. Since CFD trading does not involve the actual asset and operates independent of the market, it allows for greater flexibility than traditional trading — for example, access to foreign markets, leveraged trading, fractional shares, and short selling.
What is CFD trading?
CFD trading is defined as ‘the buying and selling of CFDs’, with ‘CFD’ meaning ‘contract for difference’. CFDs are a derivative product because they enable you to speculate on financial markets such as shares, forex, indices and commodities without having to take ownership of the underlying assets.
Instead, when you trade a CFD, you are agreeing to exchange the difference in the price of an asset from the point at which the contract is opened to when it is closed. One of the main benefits of CFD Trading is that you can speculate on price movements in either direction, with the profit or loss you make dependent on the extent to which your forecast is correct.
The sections that follow explain some of the main features and uses of contracts for difference:
Frequently Asked Questions
A CFD, or contract for difference, is an agreement to exchange the difference between the opening and closing price of the position under contract, rather than buying and selling the underlying security outright.
With Monyxa, you can trade a range of indices and commodities as CFDs. Register and check yourself!
We offer CFD trading with currencies, commodities, stocks and cryptocurrencies.
Trading with leverage means using capital borrowed from a broker when opening a position. Sometimes traders may wish to apply leverage in order to gain more exposure with minimal equity as part of their investment strategy. Leverage is applied in multiples of the capital invested by the trader, for example 2x, 5x, or higher, and the broker lends this sum of money to the trader at the fixed ratio. Leverage may be applied to both buy (long) and short (sell) positions. It is important to note that any losses will be multiplied as well as profits.
All of our CFD markets, including markets on MetaTrader, expire. When a CFD market expires, we close all open positions based on our most recent prices and all open orders are cancelled. To retain your open positions in a market, you must manually open a new position in the next contract month.
CFD shares don’t expire every quarter, certain trades do (energies, house prices, basically future trades) but with most markets you can hold a contract for difference for as long as you want to.
Any financial investment involves risk, and CFDs are no different. CFD assets traded without leverage have the same risk as those assets traded directly. On Monyxa, for example, you can invest in any asset without applying any leverage. However, trading CFDs with leverage increases your market exposure, thereby, increasing your risk.
A Contract For Difference (CFD) is essentially a contract between an investor and an investment bank or spread betting firm. At the end of the contract, the parties exchange the difference between the opening and closing prices of a specified financial instrument, which can include forex, shares and commodities.
The biggest difference between a CFDand a Forex contract is the fact that CFD’s cover a diverse range of markets. While forex is limited to the currency markets, CFD contracts can range from a stock CFD, commodity CFD or indices CFD. With forex, the lot size is uniform regardless of whether you trade EURUSD or USDCAD.
- Higher Leverage.
- Global market access from one platform
- No shorting rules or borrowing stocks.
- Professional execution with NO fees.
- NO Day Trading requirements.
- Verity of trading opportunities.