Archive | November, 2009

CFD Trade or Stock Market Trading?

24 Nov

CFD trade…I was mulling about the term Contracts for Difference these past few days. Ever since I decided I want to tread along the lines of investing  in the stock market, I could not help but encounter a few terminologies along the way. And yes, one of them is trading CFDs.

CFDs are like shares.  You can trade them in a simulate stock market environment.  However, you do not actually own the shares compared to trading in the stock market itself. If you are a beginner, you may get lost with all these CFD deals.  However, as you go along, you will find out that CFD trade is better than stock market trading.

CFDs are better compared to stock market trading for the following advantages:

•           Small traders have the opportunity to  earn larger profits through leveraging.

•           Traders may earn profits even when the trend is falling through short selling.

•           CFDs incur lower costs with better returns compared to stock market trading.

•           Setting stop losses is easy and can be done online, plus some CFD providers offer the option of setting Guaranteed Stop Loss Orders, which is a huge bonus for trading CFDs – as it means your stop is guaranteed at the exact price you set.

•           Plus, traders have the option to  set orders in place of an evening after the market closes.

With these benefits that are not available in stock market trading, CFD trade is a good alternative for share trading.