Benefits Of CFD Trading: Why Trade CFDs

Why Should Beginners Trade CFDs?

Attractive leverage for traders

One of the biggest advantages of CFD trading is that you can use leverage in many different trading markets, such as the forex market, but CFDs offer higher leverage potential. This can be very attractive for experienced individuals aware of the risks. You can learn more about using leverage successfully by checking out our blog. 

Beginners using leverage only need to be aware that trading with CFDs requires prudent risk management. Stop-loss orders and only committing capital to what you can afford to lose must be used.

Going Long or Going Short

CFD markets also allow to speculate on going long or going short, unlike traditional investing where profit depends on price increases. If you open a long (buy) position, you expect the price to rise. However, if you open a short (sell) position, then you are expecting the asset’s price to drop. 

This flexibility is one of the core advantages of CFD trading. It means that you can potentially capture opportunities regardless of whether the market is trending up or down. 

A Diverse Set of Options

Want to speculate on the price of gold or another asset? You can do so with a CFD and trade more than hundreds assets from one account. Prefer to trade on the performance of publicly floated stock or perhaps a broader index? CFDs make this possible too. This is one of the key reasons why CFD trading has generated so much interest globally: there are simply many different strategies for traders to execute.

The best part is you’ll be able to do all this from a single trading platform, MetaTrader 4 (MT4). Portfolio diversification allows you to trade multiple different assets without switching brokers. This flexibility is a big plus point for some traders. 

More Choice in Lot Sizes

CFD traders are also able to trade with much smaller lot sizes, making it easier to open and close these smaller trades. You are not required to always trade in large “standard lots”. Smaller lot sizes are far more suited to traders seeking to reduce risk and capital outlay. 

However, it's important to remember that there will still be some level of risk involved. This is a big boon to beginner traders, as you will be able to learn with smaller trades at the start, and scale up gradually the more you learn.

Day Trading Possibilities

CFD markets also permit day trading, where traders open a position for a few minutes or hours up to the time of closing for the market in your area. There is no requirement to hold positions overnight, thus avoiding overnight financing costs or rollovers, unless you wish to. Traders can then take their profit or settle the loss. 

This means there is no need to keep financing your position long-term, as the trade is opened and closed within the same trading day. It makes CFDs incredibly well-suited to day traders.

Capital & Lower Costs Efficiency

With CFDs, your capital is not tied up in full value trades, freeing up funds to trade elsewhere or diversify. Also, you avoid the cost of owning the underlying asset.

Furthermore, CFDs also mirror the underlying asset price movement closely, simplifying execution.

Get started today - Trade CFDs with TMGM

Are you ready to begin trading with CFDs? Sign up for TMGM's world-renowned live trading account and get started on the best trading experience you’ll ever have! It only takes 3 minutes to sign up for an account!

TMGM offers access to the most user-friendly platform, a wide range of CFD instruments, and tools designed to help you manage your risk. Explore their comprehensive Trading Academy beforehand if you wish to learn more about trading.