Efficiently Use Your Capital

Efficiently utilize your capital by putting up only a small percentage of the total investment value by using leverage. To start with, trading on a CFD you need to deposit only a fraction of the total trade value. Leverage can be helpful if the market moves in the direction that you are expecting it to be but it carries a high amount of potential risk if the market moves against your favor.

Gain From Rising And Falling Markets

The market is volatile. It may go up or down. When you trade CFD’s you can potentially profit from rising or falling markets because you are not owning the financial instrument; instead you are trading based on the price movement of the same. This makes it easy to sell a CFD like buying it.

While trading in a bull market a trader would look to buy a CFD position first and then sell at a later date to end their position. This is known as ‘going long’.

Again while trading in the bear market a trader would want to sell a CFD position before buying it back again at a later date to liquidate their position. This is known as ‘going short’ in trading.

Trade On A Wide Range Of Markets

CFD’s present traders an opportunity to trade in a variety of markets and in a range of instruments that would not be otherwise available to investors. The ability to trade across varied markets helps traders diversify their trading portfolio.

Ability To Hedge Your Positions

Implementation of hedged positions can help investors cut down the potential risk. To cite an example if you have a long position that is incurring loss you can open a position in the opposite direction using a short CFD. This will help to even out losses, as the short position will start to make gains if prices continue in a downward direction. Hence ‘hedging’ can allow you to limit risk and prevent future losses