If you want to trade in the market then I invite you to make use of one of the most used and important investment instruments, but be careful to invest using CFDs because the risk of capital loss is very high.
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CFD Difference Contract
CFDs are financial products which are derived from shares, warrants or futures, these can be bought and sold like any other financial instrument within the currency market itself, in other words this financial instrument is nothing more than a contract in which the differences in the values of some assets are exchanged between the opening and closing of the contract that is being made giving full access to all the liquid benefits that are being generated, offering unique advantages that encompass in a single product multiple financial benefits that give the shares, warrants and futures.
This type of contracts was created in the United Kingdom during the 1950’s with the objective of having access to trade negotiations that have a large amount of leverage by free investment funds for private clients, Forex trading with this type of contracts is very profitable because the profits that are obtained are very high compared to other financial instruments so its use has increased in recent years by 54% compared to any other instrument that is used to trade in the currency market.
Using CFDs helps decrease losses on stock trades
Many successful traders operate with many options and financial instruments to increase their income however the risk of having losses in Forex is always present so when trading with stocks the use of this type of contract can minimize the losses you have trading with them. If a particular trader invests a large amount of money in the shares of a particular company can begin to lose money because the shares begin to fall in price because of the time that passes, so trading with shares if they are sold in a very short period of time (less than a year) after having bought them can obtain speculative profits with respect to the percentage of profits that can be obtained however this will depend on a more than proportional increase in its price, in the event that such shares do not have a proportional increase with respect to their price and there may be some loss in the short term a professional investor may make a trade in the opposite direction using CFDs to secure their transactions with shares and minimize or avoid losses that may be financially significant. Using CFDs in the opposite direction is freezing the trade and therefore the profit until you want to sell the shares.
Trading CFDs is simple and very basic for making money
Making investments with CFD is very simple so much so that the procedure for making trades is extremely easy which allows a trader to increase their profits potentially as long as they make the trades correctly so it is recommended that before doing this they use demo accounts such as Libertex which is a broker which allows trading with CFDs and coupled with the methods that will be used.
However, if a trader estimates that the price of a company’s shares will lose value in the next few hours, then the investor will open a sales contract on the company’s CFD, as the hours go by this price falls, but it is estimated that in the next few minutes it will increase, so the trader decides that it is time to close the sales contract he had opened and buy back the CFD he sold at the beginning of the operation, in this way he can avoid short term losses due to decreases in values and receive gains due to estimated increases in a certain period of time.
The flexibility that this instrument possesses is versatile for many investors, since it tends to maximize the amount of money that the investor has, these types of contracts also allow to have a broader vision of the international financial market relating the movements of the stock exchanges with the growth and decrease of the value of multiple assets.
CFDs guarantee a Stops to minimize losses
Assets are constantly increasing and decreasing in value, which is why using CFDs allows you to trade through fluctuations that occur within the currency market, limiting risks and protecting capital against any unforeseen movement that may occur during a financial operation in Forex. With a guaranteed stop, a maximum and minimum exit price can be established for a position that will be maintained even if there is a drastic movement in the price level. In this way you can invest taking advantage of the possibility of leverage by placing a certain amount of money as collateral which can be traded as if you had bought a large number of securities.
With a guaranteed stop, CFD trades can have a high leverage where only a fraction of the total value of a position is contributed when opening a trade and in case of an unexpected decrease there will be a stop freeze to minimize the loss of trades while maintaining a total exposure in the market.
CFDs have a low percentage of commissions
As previously mentioned, this type of contract allows for a high level of leverage to carry out operations and guarantees a stop to avoid capital losses, but beyond that they also have low commissions which makes this type of contract an even more attractive financial instrument for investors to be able to ensure a larger amount of profits by paying a minimum amount for the services to the broker through which it operates, but such commissions will depend on the country from which the operations are carried out and the assets that are used to operate.
CFDs do not have political rights
CFDs are contracts derived from assets and therefore do not have any political rights, especially those made for the shares of a company. The fact that you buy shares of a company through these contracts does not mean that you have any right over it, even though you do not have any political rights if you have economic rights over the shares due to the fact that you have power over dividends, if the position you have is short and dividends are distributed the money is automatically deducted from the account so you should be careful with this type of positions therefore it is advisable to make Swing Trading operations which are open in a moderate period of time and allow to detect more easily if a trend will be bullish or bearish.
Uses Swing Trading Strategies
Swing Trading is a technique to make investments by using charts to estimate the next stock quotes detecting the bullish and bearish trends to take advantage of them and make money if the market is up or down. In order to apply it in the contracts you must select a CFD together with its respective graph and then you proceed to buy the position if it is on the rise or fall and finally you proceed to calculate the Stop loss that will be placed on it, preferably you must place a dynamic Stop which will be able to move along with the quotation that is developed at the moment.