What are CFDs?
Contracts for Difference (CFDs) allow you to trade on the price movements of financial markets, without having to buy or sell underlying assets directly. CFDs allow investors to make profits from a wide range of markets including equities, indices, currencies and commodities. Generally, CFDs cost less than directly investing in the underlying asset it represents. CFDs can be used to speculate on upward or downward price movements, making them a flexible alternative to traditional trading.
How do CFDs Work?
Contracts for Difference is an over-the-counter financial agreement to exchange the difference between the opening and closing value of a contract at its close. Rather than buying or selling the actual instrument on which your contract is based, you simply place a trade with a CFD provider like OTM Capital. The price of your CFD will correspond with current price of the actual instrument on which your contract is based.
Leverage your Investment Potential
CFDs are traded on leverage, so you can increase your exposure to an underlying asset with the same initial investment. To open a CFD trade, you need to deposit only a small percentage of the total trade value. OTM Capital offers the option of 100 times leverage on your invested capital.
Trade Financial Markets around the World
CFD trading provides you with access to a wide range of markets that are often unavailable to retail investors. It is as easy to trade on the price movement of commodities such as oil or gold as it is to trade an individual equity. CFDs also allow you to speculate on whole indices or sectors from a single trade.
Profit when Markets Fall as well as Rise
By ‘going short’ (selling), you can profit from a falling market as easily as you could profit from a rising market by buying it. If you believe that a company or a market will experience a loss of value in the short term, you can use CFDs to sell it today, with the expectation that you can buy it back in the future. As always, if the price of your trade moves against you, your position will result in a loss.
Since CFDs can be ‘shorted’, they can be used to provide ‘insurance’ against price falls in an existing portfolio. For example, if you have a long-term portfolio that you wish to keep, but you believe that there is a short-term risk to the value of your investments, you could use CFDs as a strategy to mitigate short term loss by ‘hedging’ your position.
Why Trade CFDs with OTM Capital?
CFDs are an increasingly popular way to trade, thanks to their flexibility and accessibility to global markets. OTM Capital provides you with the most popular CFDs.