Jiří Filip Commercial message: Contract for difference - CFD, is a group of instruments focused on short-term investing. These are contracts for difference, which are a legally binding agreement between two parties, the "buyer" and the "seller", whereby the agreement consists in the fact that the buyer pays the seller the difference between the current value of the asset and its value at the time of the conclusion of the contract.
When you trade CFDs, you are only estimating the movement of the price, which can either rise or fall. Your main task as a trader in the CFD market is to estimate the mood of the market and thus the movement that the given instrument will indicate.
If you want to become a short-term investor or trader, you must know the term short position a long position. To put it simply, with a short position (SELL) you are speculating that the price will fall. on which you are speculating, and a long position (BUY), on the contrary, an increasing price.
When trading CFD you have to take into account the high volatility of the market - you can defend yourself with defensive orders ST and TP = Stop Loss and Take Profit.
You will also use financial leverage, which entails both the chance to open a large position with a small amount of invested capital and greater responsibility and risk.
If you were to open a minimum position of 0,01 lot (1 lot is equal to 100 units of the base currency) on the EURUSD currency pair, you will need approximately EUR 000, because the available leverage on the EURUSD pair is 33:1, which means that to open a position you would need 30% of face value margin. This would open a position of €3,33 (1 x 000) with a margin of €0,01.
Best trading platform for CFDs?
If you are looking for the best CFD trading platform, a great choice is xStation5 from XTB, which is available in both desktop, mobile and browser window versions.
At the same time, you have the opportunity to try trading for free on a test account offered by the company. For more information about the platform, see the link xStation5.
How to start trading CFDs?
If you don't know how to start trading CFDs and want a step-by-step guide with pictures and examples, you can visit the educational section directly from XTB where they will explain everything and help you set up = What is CFD trading?
