CFD Trading : CFD stands for Contract for Difference. It is an innovative and very popular tool of investment. It gives the trader the opportunity to trade on the price movement of any financial market. Some of the financial markets available are:
Thanks to CFD, you can trade in any of these markets without owning the instrument. If your trading strategy tells you that the particular instrument will rise in value, you can place a buy trade. If, on the other hand, your strategy tells you that the asset will fall in value, you can place a sell trade. The beauty of CFD trading is that it allows you to make money both when the price rises or falls. In the traditional trade, however, you will need to buy the asset before you can trade it. In such a situation, you will only be able to make money when you sell that asset and not when you buy it.
Bear in mind that you can make a profit or loss per trade. If the market goes in the direction you predict, you will record profit. If it goes in a different direction, you will record losses. Always bear this in mind when trading CFD on derive in South Africa.
The use of leverage makes it possible for a trader to make a lot of profit on Deriv. Leverage will allow you to open a trading position larger than what your capital can permit. The extra money you will need to open that trade will be provided by Deriv. The size of the position you can open will depend on the amount of leverage that you choose on synthetic indices. synthetic indices offers high leverage. So, it is possible for the trader to open a very large position on the broker.
While it is possible to make a lot of money when you trade using leverage, you need to understand that leverage is a two-edged sword and can swing your trading results either way. This means that it can make you record profit or loss. High leverage can help you to make a lot of profit and can also cause you a lot of loss. So, it is in your best interest to use leverage with care when trading.