Best Guide for CFD Trading of Stocks and Shares

Investors and traders have some common ground in the markets, their time frames often overlap. CFD trading facilitates the needs of both in various ways.

Complex Stock Investing through CFD Trading

CFD trading has become very popular in the last 10 years or so, this is for various different reasons which range from tax planning to flexible trading terms, and better leverage which makes even expensive stocks much more affordable to trade or invest in. Many know what is CFD trading all about, and they certainly all know about the affordability leverage offers. But CFDs also offer other more subtle advantages, such as the ability to go short a stock, even when the same stock in the stock market is under short selling restrictions, during extreme bear market times. CFDs also offer a kind of unfair advantage to the trader, because the trader has all the liquidity they can possibly need, at all times. Which results in better filling prices, and overall higher profitability. Trading the stocks themselves, often comes with liquidity issues, and traders end up getting bad filling prices, especially when wanting to close a profitable long trade and the stock is already falling on profit taking. CFDs are even better than Futures in that regard, and provide the most one-way liquidity to the market, while shielding the trader from many adverse liquidity issues.

 

CFDs Make it Easier to Make Money when One Already Trades Profitably

CFD trading doesn’t help traders turn their trading around from losing to winning, it only helps boost profitability of already profitable trading strategies. Trading online is often advertised as an effortless and ultra affordable low risk game, but this isn’t so of course. Risk and confusion are always in the market. Stock investors often find themselves in a dilemma when holding onto stocks, stock that will rise over the years but are bound to have downward corrections in the short term. This is when investors become traders, using CFDs. Online CFD trading does in such cases allow these investors-traders, to make $1,000s during these corrections, even when short selling restrictions are imposed on the said stocks. Thereby significantly increasing the profitability of their investment portfolios. Investors are more selective on choosing stocks to invest, while traders who only trade CFDs without holding the underlying stocks, tend to trade in both directions. Traders are less concerned with the quality of the stock, and trade many more stocks than the typical investor holds in their portfolio. CFDs are very efficient trading instruments in the hands of these investors and traders. Then, there are some tax related benefits, which are more or less straighforward in most western countries. These allow traders and investors to offset some of their capital gains tax liability against losses.