Why Smart Investors Trade in the CFD Market

The CFD market offers many unique advantages, such as linear hedging, isolation and more. Keeping one’s trades secret is a less known reason for using CFDs.

Benefits of Trading through the CFD Market

The CFD market offers great secrecy to traders willing to hide their investment intentions from the mainstream market. Liquidity in CFDs is great and extremely helpful. But CFDs also provide excellent secrecy for smart and large size traders willing to keep their trades away from public view. Online CFD trading offers so much flexibility to commodity and stock traders, where some of them make millions. Without having to disclose their trades to anybody else, only their broker knows but information is confidential. CFD trading platforms offer very good one way liquidity, while shielding the trader from adverse, extreme market conditions. But confidentiality is also good sometimes, because many smart traders don’t want their trades revealed through a main exchange. Many of these traders trade stocks and commodities where a major trend, or very sharp movement is due to happen. And in cases where they don’t want many people to figure out their intentions, they always use CFDs. CFDs also allow them to go short stocks, at times where markets are going down and here is a high risk of short selling restrictions being imposed in major stock exchanges. CFD trades handle any bear market with no problems, even as other stock traders are unable to hedge falling stock prices. Especially in this case, everyone wants to keep their short selling secret as mainstream investors despise short sellers. There is a feeling that short sellers profit fast and easily out of the buying of long term buy and hold investors. But markets do move fast when they fall — it’s always been that way — regardless of CFD trading activity.

The CFD Market is the Swiss Army Knife of Smart Traders

The CFD market meets the needs of most traders today, and is perfectly suitable for fast trading, up to $100 per point, but also for low frequency traders and investors even above $100 per point. Online CFD dealing delivers on aspects of trading where the classic spot market and futures markets cannot deliver, for all kinds of reasons. Smart traders and investors were the first to spot the advantages and turn to CFDs. CFD trading doesn’t make the financial markets less risky; the risk of losing is always there. But the advantages make trading more efficient, and actually possible where other instruments become useless or too crude to use in a precise manner. Hedging for example requires low dealing costs and linear pricing, Futures fail to meet hedgers’ requirements. Therefore smart traders and investors use CFDs in all kinds of hedging, including cases where they don’t want many people to know what market is being hedged. High profile traders even place small misleading trades on the open spot market. While also placing their massive, opposite, intentional trades through CFDs.