6 Crucial Advantages of CFD Trading That Amplify the ROI
A huge market exposure is one of the most prominent desires of every modern trader. He or she is therefore concerned about trading the leveraged products, like CFDs. The CFDs, popularly known as the contract for difference, helps one to speculate share price movements. He just needs to pay a small fraction of money, regardless of the total value of the contract. Hence, the chances to magnify the ROI, definitely increases.
But, apart from all such features and benefits, this modern trading is often misunderstood by the novice traders. This is majorly due to the lack of knowledge about the art of handling risks, trading and most importantly, the advantages.
Listed below, are some of its major pros that you must keep in mind:
1. Zero Day Trading Restrictions
This will certainly grab your attention. While in CFD markets or trading, you will have no restrictions over the day trading. On a general basis, restrictions or limits are placed on the amount of day trades along with a minimum amount of capital. But, this is not applicable in the CFD markets.
2. Market Access with No Shorting Cost
One of the key benefits from this type of trading is related to the global market access. One can have access to any market, if the particular market is open from their broker’s CFD trading platform. Further, you can trade any market without any shorting cost. The CFD markets generally do not have rules for short selling.
3. Greater Leverage
As compared to the traditional trading, this modern method helps you witness a higher leverage. It might begin as low as 2% margin, while increase up to 20%. Broadly speaking, lower margin means a greater return and a lesser capital outlay.
4. Variety of Options
While trading in the CFDs, you may come across varied options, like treasury, commodity, stock, currency and index CFDs. Now-a-days, you may also come across sector CFDs. Hence, as a trader, you have huge opportunity to invest in a multitude of options.
5. No Fees Involved
You may not be required to pay any fees to enter or exit any trade. The CFD brokers often provide different order types to the traders. These may include contingent, stops and limit orders. The ones, who offer guaranteed stops, may charge a fee.
6. No Stamp Duty
The trader generally needs not to pay the stamp duty, as he or she does not own the underlying instrument. This helps the trader to save 0.5% on each trade value. But, you must keep this in mind that the tax laws are subject to individual circumstances and they may change.
Conclusion
In a nutshell, trading in CFDs is an effective way to boost your presence and exposure in the market. Leveraging this opportunity can help the ROI multiply by several times. You just need to keep tandem with the market conditions, trading rules and the potential risks.
Resource: http://cfd-tradingplatform.com/