Trade CFDs Online – How to Trade Stocks

CFDs let you to hedge physical portfolios and trade price movements of markets against possible loss of value. The price of a CFD duplicates the price of an underlying instrument. If you think that the market price will rise, you can purchase CFDs or go long to make a profit after closing the contract at a higher price later. If you think the markets will drop, you can sell CFDs or go short to make a profit as you close at a short position at a lower price later.

Trading CFDs

In CFD trading, you can make profit on both falling and rising markets. The prices of CFDs are quoted as ask or bid. You buy at ask if you believe the markets will rise and you want to go long, and short sell CFDs at a bid price if you think the prices will fall. These are traded on leverage, and you can introduce a position when you deposit a fraction of the entire trade value. If markets move in your expected direction, leverage enables you to magnify profit. Likewise, this may lead to more losses if the markets go against you, which may result in your deposit getting wiped out and lead to a short margin. Hence, you must be careful to mitigate that risk and manage your positions well.

Using a trading platform to trade stocks

A trading platform can expose you to commodity and global capital markets, and provide you with access to unique features, which can let you trade and build personal composite instruments (PCIs). Some of the best platforms offer more than a hundred trading instruments. This way, you can trade CFDs online as simply as if you are trading traditional currency as it lets you sell CFDs while expecting a drop on the price of an underlying asset or buy a particular number of CFDs while expecting the underlying asset's price to rise. Eventually, an opposite transaction can close the position.

A reliable trading platform lets you trade stocks online and gain access to highly coveted stock exchanges like the British, US, Chinese, Russian, Japanese, and German markets. In stock CFD trading, you must consider the difference of the leverage from other difference by accounting the possible risks that may result from it. The highest possible leverage could be at 1:40 in some trading platforms.

If you are a new trader, a trading platform can help you hone your skills in trading on the stock market using CFDs. Some service providers offer a demo account to let you realize how it works while helping you become more familiar with various instruments. As you practice, you can go through a helpful tutorial for guidance.

About the Author:

Araik Zohrabyan is the Public Relations Officer at IFC Markets. He provides current and summarized information to enhance business awareness. His valuable and strategic inputs gives a better understanding of IFC Markets, an International Forex and CFD Broker. IFC Markets is involved in the development and application of new effective projects in the field of financial technologies.