How does CFD trading work?
Contracts for difference (CFDs) are a popular alternative to traditional trading that you may have heard mentioned. But, what do they involve and how do you decide whether they’re right for you?
In this course we’ll run through all the essentials of this derivative product, explaining how CFDs work and why people use them to take a position on the financial markets.
You’ll learn about the many benefits CFD trading offers, as well as the risks involved. And by the end of the course you should feel equipped to get started as a CFD trader.
Lesson example: using leverage in trading
To help you understand CFD trading, our course provides videos, illustrations and interactive exercises that guide you through all the fundamentals. To give you a flavour of what to expect, here’s an extract explaining how leverage works:
Leverage gives you a relatively large exposure to a market with just a small deposit.
Imagine you wanted to trade CFDs on gold:
- Without leverage, buying one ounce of gold might cost $800
- But your CFD provider only charges an initial deposit margin of 5%
- This means you need to put down a deposit of just $40 to open a position on an ounce of gold
It is important to keep in mind that your profit and loss will still be calculated on the full size of your position.