Cryptocurrency

<h2 id="span-style-font-weight-400-what-are-cfds-span"><span style="font-weight: 400;">What are CFDs?</span></h2> <span style="font-weight: 400;">The Contract for Difference (CFD) is at the core of CFD trading. There are many types of CFDs, such as ETF, Bond, Cryptocurrency, Index, and </span><a href="https://tradersunion.com/interesting-articles/cfd-trading-commodity-cryptocurrency-index-what-type-of-cfd-successful-traders-choose/" rel="noopener noreferrer nofollow"><span style="font-weight: 400;">commodity CFDs</span></a><span style="font-weight: 400;">. This is essentially an agreement between two parties - the buyer and the seller. They agree to exchange the difference between the current asset value at the moment of concluding the contract (opening position) and its value at the time of the contract expiry (closing position).</span> <span style="font-weight: 400;">A CFD is similar to a goods supply contract but with a crucial difference - the seller is not obligated to own a real asset when trading CFDs, and the buyer does not obtain the rights to demand delivery. If the asset price increases between the first and second transactions, the buyer gets the difference from the seller. Conversely, if the price drops, the seller receives the difference from the buyer. The contract can be terminated upon the statement of either party, granting flexibility in CFD trading.</span> 
<h2 id="span-style-font-weight-400-pros-and-cons-of-cfd-trading-span"><span style="font-weight: 400;">Pros and cons of CFD trading</span></h2> <span style="font-weight: 400;">According to TU experts, CFD trading has distinct advantages and disadvantages.</span> 
<h3 id="span-style-font-weight-400-pros-span"><span style="font-weight: 400;">Pros:</span></h3> 
<ul> 
 <li style="font-weight: 400;" aria-level="1"><span style="font-weight: 400;">Higher leverage is possible.</span></li> 
 <li style="font-weight: 400;" aria-level="1"><span style="font-weight: 400;">Trading a wide variety of asset classes on one platform or account.</span></li> 
 <li style="font-weight: 400;" aria-level="1"><span style="font-weight: 400;">A single EA can be used for different classes of assets.</span></li> 
 <li style="font-weight: 400;" aria-level="1"><span style="font-weight: 400;">There's no need to hold assets or to register a wallet for Cryptocurrency CFDs.</span></li> 
 <li style="font-weight: 400;" aria-level="1"><span style="font-weight: 400;">Low transaction expenses.</span></li> 
 <li style="font-weight: 400;" aria-level="1"><span style="font-weight: 400;">Traders are not obliged to provide the underlying asset for CFD sale.</span></li> 
 <li style="font-weight: 400;" aria-level="1"><span style="font-weight: 400;">In countries like England, stamp duty is waived on CFD transactions.</span></li> 
 <li style="font-weight: 400;" aria-level="1"><span style="font-weight: 400;">Traders need not worry about the futures settlement date for Futures CFDs.</span></li> 
</ul> 
<h3 id="span-style-font-weight-400-cons-span"><span style="font-weight: 400;">Cons:</span></h3> 
<ul> 
 <li style="font-weight: 400;" aria-level="1"><span style="font-weight: 400;">Dividends or coupon payments cannot be received in case of stock or bond CFD trading.</span></li> 
 <li style="font-weight: 400;" aria-level="1"><span style="font-weight: 400;">Forex brokers are often the contracting party for CFD transactions, necessitating a reliable choice of broker.</span></li> 
 <li style="font-weight: 400;" aria-level="1"><span style="font-weight: 400;">CFDs are off-exchange contracts and are not strictly standardized.</span></li> 
 <li style="font-weight: 400;" aria-level="1"><span style="font-weight: 400;">The regulation of the CFD market is weaker than that of the underlying asset market.</span></li> 
</ul> 
<h2 id="span-style-font-weight-400-what-type-of-cfd-successful-traders-choose-span"><span style="font-weight: 400;">What type of CFD successful traders choose</span></h2> <span style="font-weight: 400;">The choice of a specific type of CFD depends on several factors which impact the success rate of CFD trading:</span> 
<ul> 
 <li style="font-weight: 400;" aria-level="1"><span style="font-weight: 400;">CFDs have lower liquidity and higher volatility compared to currency pairs.</span></li> 
 <li style="font-weight: 400;" aria-level="1"><span style="font-weight: 400;">CFDs do not envisage delivery of the underlying asset, meaning the trader will not receive dividends or coupon payments.</span></li> 
 <li style="font-weight: 400;" aria-level="1"><span style="font-weight: 400;">Transaction expenses in CFD trading are often higher than in currency pair trading.</span></li> 
 <li style="font-weight: 400;" aria-level="1"><span style="font-weight: 400;">Before starting to trade CFDs, thoroughly testing the chosen CFD for compliance with the used strategy is recommended.</span></li> 
</ul> 
<h2 id="span-style-font-weight-400-conclusion-span"><span style="font-weight: 400;">Conclusion</span></h2> <span style="font-weight: 400;">The world of CFD trading is expansive, filled with opportunities and challenges. It offers traders a dynamic platform to explore different asset classes, leveraging market fluctuations without owning the underlying asset. We encourage readers to visit Traders Union's official website to delve deeper into this fascinating realm.</span>

Commodity CFD Trading | Detailed Guide Published By Experts

Table of Contents

FinanceFeeds

Outros artigos publicados em 26 de jul. de 2023

Multichain and The SandBox Price Prediction: Investors Keep Flocking To Uwerx Presale

Can Solana (SOL) Become Best Performing Asset This Year?

Ripple CEO Brad Garlinghouse Criticizes SEC’s ‘Regulation by Enforcement’

Binance to Enhance User Experience with New Tags and Stablecoin Listing

Beosin Won Top Award at AIBC Asia Artificial Intelligence Blockchain and Cryptocurrency Pitch

GALA Token Mimics Crypto Market; Lose 11% Over the Week

Join our free newsletter for daily crypto updates!