What is a CFD? What is CFD Trading? Contracts for Difference, also known as CFDs, are a rapidly growing market attracting an increasing number of retail traders from around the world. A CFD, or Contract for Difference, is an agreement between two parties to exchange the difference between the opening price and closing price of a contract.
You can use CFDs to trade and speculate on the price movements of thousands of financial markets regardless of whether prices are rising or falling. You can go long (buy) a CFD market, and profit from prices as they rise or go short (sell) and profit from falling prices. CFDs give you a great deal of trading flexibility, allowing you to profit from financial markets regardless of price direction.
CFD trading is also a leveraged product, allowing you to maximise your market exposure for only a small fraction of the investment you would typically need to trade the underlying asset directly.
By trading CFDs with AvaTrade, you can tap into the expertise of one of the world’s leading providers. They offer access to over 1,000 global markets, so whatever your trading objectives, you’ll find the instruments you want to trade, including thousands of prices on equities in Asian, US, European and UK markets. They also offer trading on the movement of global indices and major or minor currency pairs.
To help you to make those all-important trading decisions, they also have the latest market news, customisable charts and market profile information, available free on their trading platform. 1-click functionality allows you to buy/sell the instruments you want to trade on their AvaTrade Platform via Windows Trader, Web-Trader, iPhone/iPad, Android app and Windows Phone app.
Trading CFD with AvaTrade
AvaTrade is not only a leading global broker, but also a pioneer in the digital currencies trading market. Being among the first brokers to introduce Bitcoin, and the first to add Ethereum, and Litecoin to its trading portfolio. AvaTrade EU Ltd is regulated by the Central Bank of Ireland (No.C53877). The company is a rapidly growing CFD provider and currently offers its portfolio of over 1000 instruments.
Why Trade CFDs with AvaTrade?
CFD trading with AvaTrade offers a number of benefits over other forms of trading:
1. Profit when the markets fall as well as rise
With CFD trading, you can profit from a falling market by ‘going short’ (selling), just as easily as you could profit from a rising market by ‘going long’ (buying). If you believe that a company or market will experience a loss of value in the short term, you can use CFDs to sell it today, and your profits will rise in line with any fall in price. As always, if the price of your trade moves against you, your position will result in a loss.
2. Leverage your investment potential and reduce your capital outlay
Trading CFDs allows you to take an equivalent position to a direct purchase for a fraction of the initial capital outlay. Normally, you would need to pay the full value of your investment to your broker. However, at AvaTrade you can trade the same market through a CFD but only be required to deposit a small initial percentage of the same equivalent value, typically margins 10%-20%, meaning that you can take a larger position for a relatively small amount of funds, magnifying your return on investment.
For example if you wanted to go long or buy $15,000 worth of Tesla, you can do so with an initial deposit in your AvaTrade CFD trading account of $1,500 (with a margin of 10% on Tesla shares). This leverage is great news if the market moves in the direction that you expect, but it carries a high degree of risk if the market moves against you.
3. Access to global markets
CFD trading gives you access to a wide range of markets that would not otherwise be available to retail investors all from one trading platform. You can speculate on the price movement of an index such as the Germany 30, UK 100 or USA 500 or trade a major currency pair such as EUR/USD or USD/JPY. At AvaTrade they offer access to over 2,000 global markets, including shares, indices and currencies. See their range of CFD markets.
4. Hedging with CFDs
As CFDs allow you to short sell and therefore profit from falling market prices, they are often used as a ‘hedging’ tool by investors as ‘insurance’ to offset losses made in their portfolios. For example, if you have a long-term portfolio you wish to keep, but feel that there is a short-term risk to the value of your investments, you could use CFDs to mitigate a short term loss by ‘hedging’ your position.
This way, if the value of your portfolio does fall, the profit in the CFDs would help you offset these losses, thus enabling you to retain your portfolio without incurring any significant loss to its overall value.
How to Trade CFDs in 4 Easy Steps
1. Open a trading account with AvaTrade.
2. Fund your account.
3. Choose between any CFDs contracts.
4. Start trading.
High Rated CFD Provider
AvaTrade is one of the highest rated CFD trading apps on Apple’s AppStore and Google Play as it is simple to use yet powerful in its many advanced features. It also includes CFDs on popular financial instruments. They offer the complete package: Leverage of up to 1:200. Tight spreads. No commissions. Fast and reliable order execution. AvaTrade Mobile App Download Now.
Risk Disclosure Notice
CFD’s can put your capital at risk if used in a speculative manner. CFD’s are categorized as high risk by some regulatory authorities as there is no protection of capital, no guaranteed return and customers can lose the amount invested. With the AvaTrade Trading Platform it is not possible to lose more than the amount invested and customers cannot be left in debt to AvaTrade. Trading CFD’s is not suitable for all investors; make sure you fully understand the risks involved.
AvaTrade Licensing Information
AVA Trade EU Ltd is regulated by the Central Bank of Ireland (No.C53877). AVA Trade Ltd is regulated by the B.V.I Financial Services Commission. Ava Capital Markets Australia Pty Ltd is regulated by the ASIC (No.406684). Ava Capital Markets Pty is regulated by the South African Financial Services Board (FSP No.445984). Ava Trade Japan K.K. is regulated in Japan by the FSA (No.1662) and the FFAJ (No.1574). Read AvaTrade risk disclosure before trading Forex, CFD’s, Spread-betting or FX Options. Forex/CFD, Spread-betting & FX Options trading involves substantial risk of loss and is not suitable for all investors.