CFDs have been wildly popular in the UK and Europe, but their popularity has increased since their introduction to Asia. In 2014, they held a quarter of the European market share, at around 41 billion USD worth of traded assets per day.
The benefits of trading CFDs are that investors can profit from downward market movements without physically owning any assets – just by speculating on price changes. They differ from traditional options trading. They don’t give you a right over any underlying asset – just a short position with a higher degree of leverage than trading stocks or futures contracts. Due to this high degree of leverage, there is also an increased risk involved.
It’s essential for anyone looking into trading CFDs to understand how much leverage is appropriate when considering the impact of large price swings on their potential losses. It’s a common … READ MORE