Gaining Market Leverage with Online CFD Trading

Online CFD Trading Magic

There is a good reason why most retail size, battle-hardened traders use CFDs. They are wise enough to have know the benefits of CFDs and how to use them best.

Online CFD Trading Took Stock Dealing out of the Stone Age!

Online CFD trading really has taken stock dealing out of the stone age, and into the future. Because prior to CFDs, the financial industry was made only for large investors and banks. It was simply too costly, from every perspective, for retail traders to deal in stocks. First, it was the high commissions with every trade. Then, there were the restrictions imposed by the exchange from time to time. Even though it was still possible to predict a stock price trend and profit from it, you couldn’t possibly do it in a small account. Even good traders needed at least $50,000 to even think about stock trading. Leverage was available through the provision of margin trading accounts. But it was too small by today’s highly leveraged derivative trading instruments.

Online CFD Trading is Traders Favorite Way of Dealing

Online CFD trading today is all wise traders’ favorite way of dealing in the financial markets. Because of the very powerful and unique to CFDs benefits. These are the benefits of linear pricing, and enhanced liquidity. High leverage is no big deal these days, because all instruments offer it. Be it futures, spread betting or options, all offer high leverage. But these instruments have inherently bad linear pricing. And as a result the market trades from A to B, but the trader only captures a portion of the move. Only CFDs can tackle the problem of achieving linear, maximum exposure to the market. So that the move from A to B is fully captured. As new traders learn trading and hedging methods, they realize how valuable pricing linearity is for hedging risk, in fast moving markets. In this case, CFDs make it possible to implement amazingly efficient trading strategies. Ones where overall reward is greater than overall risk. New traders are less experienced but they do bring such new ideas to the trading community. And they do make trading much more interesting.

The Edge of CFDs in Numbers

The level of enhancement that CFDs can bring in trading is phenomenal. Of course it first takes a winning strategy, to make it all happen. CFDs are not the key to going in turning one’s trading around, from losing into winning. But a poorly winning strategy can be dramatically enhanced through CFDs. For example, a poorly, primitive profitable strategy for trading stocks and commodities may only yield 10% per month, and require few big losing trades. With CFDs, the losing trades can be better controlled and made to result in much lower losses. The overall profitability of such a strategy can be doubled by dealing with these few losing trades, in a better way. That’s why hedging strategies were invented. And these cannot be efficiently implemented without CFDs. CFD trading risks are always there, because of the market’s inherent risks. But they are smaller to the risks imposed by futures, options, or spread betting. Because CFDs enable the trader to get the best filling price, on each and every trade, winning or losing. That’s what online CFD trading offers today.

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