CFD trading is a form of derivatives trading – meaning you deal on prices derived from the underlying market, not on the underlying market itself.
When you buy or sell a contract for difference (CFD) you are agreeing to exchange the difference in price of an asset from the point at which your position is opened to when it is closed.
Contracts for Difference (CFDs) is a leveraged product that provides you with greater exposure to the market you are trading. When you buy or sell a Contract for Difference (CFD), you agree to a leveraged position on the traded market as the CFD is the difference in the price of an asset from the point at which your position is opened to when it is closed. CFD's trading allows you to trade the price movements of currency, stock indices, and commodities like gold and oil without buying the underlying product.
The biggest advantage of trading CFDs is the flexibility to trade against price changes without actually buying or selling the physical instrument.
You can trade CFDs if you think the price of a financial instrument value will strengthen or if you think it will weaken. Your profit or loss in the market is determined by the difference between the price you buy for and the price you sell for.
There are several trading strategies that can be used when trading CFDs, and they can easily be understood by beginner traders too. One of the most common methods is long vs short.
A long position when trading CFDs is when a trader buys an asset.
This means that as the asset strengthens or sees an increase in its value over the life of the contract.
The life of the contract normally is between one month to more than a year.
This has a higher level of forecasting and allows traders to act on lower market
A short position when trading CFDs is when traders sell an asset because they feel that there will be a decrease in its value. However, there is an intention from the trader to buy back the contract in the future.
As CFD products are based on corresponding shares and indexes, when shares and indexes go ex-dividend, the swap rates for correlated CFD product will increase. Swap rates charged by MOGAFX are equivalent to that of our Liquidity Providers, and may vary daily, hence notification in advance will not be made when charge rates are updated.