Contracts for difference or CFD, as these are popularly called, enable traders to book profit because of changes that take place in prices of stocks and shares over a period of time. For example, you may purchase a CFD for your favorite stock when it is selling for $ 6.50 and as its price goes to $7.0, you may sell it to book a profit due its enhanced price. So, if you had procured 100CFDs of the same stock, you would have gained 0.5X100=$50. Online trading of CFDs is becoming increasingly popular as it offers many advantages. XFR Financial Ltd (XTrade) allows you to book profits through online trading of CFDs without really being in physical possession of any stocks at any time.
- Leverage & Margin
The major benefit of CFD trading through XFR Financial Ltd is its inherent extensive leverage, generally ten to one, though you can locate brokers offering a leverage of twenty to one. It simply means that you are not required to invest a huge amount of money for purchasing stocks. The reason is that the prerequisite of margin money is hardly ten percent or even lower. So, you get high returns on your investments. For example, may own some stocks offering an annual return of 25% on an investment of say, $5,000, meaning your profit at the end of one year will be $1250. Due to its leverage, CFD can give you a return of 250% with the same deal, allowing you to book a profit of $12500.
- Taxation & Cost Efficiency
You should appreciate that in case of CFD trading, there is no physical trading of any instrument through XTrade, which necessarily takes place in case you are trading in shares. So, in case of CFDs there is no expense of stamp duties, adding to your gains.
Other than this benefit, you are charged a much lower fee by CFD brokers, compared to what you are expected to be charged by share brokers. As a matter of fact, you’ll find many CFD brokers who don’t charge you any fee. Once again, allowing you to make enhanced investment and thus increase your profit. So, the main expense that needs your consideration is the size of investment you should make.
- Easy Liquidity
You are allowed to short sell your CFDs to book profit when markets start falling. Because you can make profits from bull and bear markets, online trading of CFDs drastically increases your prospects of trading.
- Feature of Automatic Stop Losses
This kind of online trading also gives you the facility of including automatic stop losses in your trades. So, it cuts down the time you need for making your trades. Additionally, it eliminates emotional trading by allowing you to exit a trade precisely at the time you want.
Ease of Trading With XTrade
A very helpful feature of online CFD trading at XFR Financial is that you can place your orders in the evenings if you are too occupied with other activates to place your orders during the day. Many CFD providers, and XTrade is included, allow investors to take position the previous night. You will welcome this facility if your other responsibilities don’t allow you to make your trades during the day. You may place orders in evenings and incorporate stop losses option therein. So, you won’t have to sit before your computer or contact your CFD provider during the day.
Now you can better realize the benefits of online CFD trading at XFR Financial (XTrade) and why this trading is getting increasingly popular, especially with people who have limited funds for trading.