What Are CFDs?
Contract For Difference is simply a trading tool that allows you stake on securities without buying. You just go to a broker, invest some money and predict the future price of the security.
If your prediction is right then you will get paid profit equal to the difference between the opening and closing price. If your prediction is wrong then you incur losses equal to the difference as well.
CFDs have so far taken the trading industry by storm. It is now even available on IQ Option .You need to however know one thing, trading using CFDs exposes you to a world of risks.
Here, you have the chance of making a lot of money within a short period of time. The opposite is also possible and you could end up incurring losses. To avoid this you will need to have a trading strategy just like in Binary trading.
Why Trade On CFDs?
CFD is a type of trading on IQ Option that carries its risks. Despite these risks, there are still some advantages that make them worth it. Here are some of the advantages CFDs have over other traditional methods of trading such as binary options.
With CFDs there also comes a powerful tool known as the Multiplier. This trading tool allows you to invest more money on a security than you currently have at hand.
For example, you can trade with $1800 even if you just have $900 in hand by opting for the 2:1.The remaining $900 is usually provided to you by your broker, in this case IQ Option.
With Multiplier is actually where the risk lies. Even though the amount of money you can make might be tempting, you also stand the chance of incurring huge losses than you had anticipated.
It could so easily go either ways and that is why most experienced traders suggest you apply a trading strategy.
CFD trading is for you if you don’t prefer trading over long periods of time. This is usually the type of trading that most casual traders prefer since you can get your profit in just a matter of minutes.
You will only need around 15 minutes a day to trade on CFDs. However, most full-time professional traders agree on that fact that better profits will require time and training.
Types Of CFDs Available On IQ Option.
In case you didn’t know, the forex market is currently the world’s largest and most liquid market. This is how it normally works, you first buy a currency at a price that you expect will rise. After sometime when the price has risen, you sell the currency and get your profit.
The process is still the same with CFD, only that you can trade without actually buying the currency. You just predict and stand to make a profit as the difference between opening and closing price.
Cryptocurrencies have recently become very popular with traders. Some people in the financial community even believe that they will change the course of the world’s financial system.
Today, IQ Option gives you the chance to trade on these electronic currencies such as Bitcoin. You no longer have to buy expensive computer systems in the name of mining.
3. CFD Stocks.
You can trade on some of the world’s largest companies without having to buy their stocks. All you have to do is stay up-to-date with news on the corporate world to know where the market is going. You then analyse your data to understand market patterns and, predict on the stock’s future price.
Differences Between CFDs and Binary Option Trading.
One major difference between the two is the limits of profits or losses you make. In Binary options trading, the margin of profit or loss is fixed and remains that same no matter how low or high the price has gone.
On the other hand, in CFDs, you stand to lose or gain as much as money as is the difference between the opening and closing price.
The other major difference is in flexibility of trading terms. In Binary trading, you can’t exit a trade until the agreed trading time has ended. However, CFD trading allows you to exit a trade whenever you want.
This might be good news if you are making losses and there’s no hope, you can just easily pull out. After all isn’t losing some better than losing all?
Why Trade With IQ Option?
If until here CFDs have impressed you then IQ Option is the best place to try it out. Here is why.
- It’s an All-in-one trading platform. IQ Option isn’t just a broker. Once you create an account with IQ Option you get access to a wide variety of trading tools. These tools include market news updates, calendars, warnings on volatity, newsletters and so much more.
- Smooth user experience. IQ Option is easily one of the biggest names in the trading industry. It has earned this position by providing its users with fast, smooth and reliable services. You can even opt to trade on the move using IOS or Android devices.
- Trading Support. IQ Option connects you to a community to support you on your trading journey. This is a place where you get to share ideas and useful information. And the best part is you get to do all this without having to leave the tradingroom.
Now you know all there is to know about CFDs. You are welcome to come try it out on IQ Option. If you have experience trading on CFDs then please leave a comment in the comments section below.
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