In this crisis where the markets are volatile, choose your strategy to trade upwards or downwards in the energy sector, for example, via IG derivatives such as CFDs or barrier products.
Any trading activity involves risk. Execution of orders through limited-risk accounts carries the risk of losing the invested capital. Options and turbo options are complex financial instruments that carry the risk of price losses. CFDs also risk the rapid loss of capital due to leverage and lack of knowledge. To reduce the risk of losing money, let’s understand what CFDs are and how they benefit the investors when used carefully.
What are CFDs?
CFD stands for 'financial contracts for differences. CFDs belong to the family of derivatives. These are modern financial instruments that allow you to trade stocks, indices, and commodities (like gold or oil) in a simple and inexpensive way.
The investor does not buy and sell the underlying. He simply has an agreement with his financial intermediary stipulating that the difference, gain or loss, resulting from the transaction will be credited or debited to his account. Hence the name CFD.
CFDs can be compared to other popular products such as turbos, warrants, click options, and certificates. However, none of these products offers such a wide selection of Underlyings. In addition, CFDs are much easier to use because. They have no expiration, no time value, etc.
The price cannot be influenced by the issuer, as is often the case for warrants and certificates (provided you choose a broker who allows you to Trade Forex CFD at the same price as the stock on the stock exchange).
How does carefully investing in Energy CFDs help you?
Price transparency- CFDs are financial products whose price is derived from that of another product. In the case of CFDs, the “other product” is the underlying security (stock, index, etc.), and the relationship is an absolute correlation. A CFD should always quote at the same price as the underlying product (beware of brokers who add a spread), and its fluctuations are exactly the same. Therefore, the energy CFD investor benefits 100% from fluctuations in the underlying. With the Best Cfd Traders platform, you can trade on any exchange without leaving the broker's platform. Fees at online trading platforms tend to be much lower than those charged by traditional brokers.
Leverage- Energy CFDs give the active investor the opportunity to use leverage. Whether or not to use leverage and the size of the leverage are the exclusive choices of the active investor. This is a great advantage over other derivative products such as warrants, turbos, etc., whose leverage is defined by the issuer. Of course, the lever must be used with caution and moderation. You can Metatrader 4 Free Download as it provides users with an intuitive and user-friendly interface.
No deadline- Unlike warrants, turbos, options, energy, CFDs do not have an expiration date. The investor can keep his position as long as he wishes.
CFDs are simple instruments, but proper information about trading them is required. It is possible to open a long or a short position on each CFD. In addition, the MT4 Trading Platform offers the possibility of hedging. By being long and short at the same time on the same CFD, the investor can set his risk to zero.