What is CFD?
Contract of difference (CFD) is an agreement between two parties whereby both of them agree to pay the difference between the opening and closing price of a market stock or asset, thus, you determine the increase or decrease in the price of the stock without owing the stock or asset. Profits or losses are determined when the value of the stock changes in comparison to the opening price.
How does contract of difference trading work?
In trading a contract of difference, you are crapshooting the increase or decrease in the price of a stock or asset. To determine how contract of difference works, you simply calculate the difference between the opening and closing prices of a stock. For example, let’s say the opening price of a stock is $54.32 and you purchased a CFD unit of up to 3000 units, then the price of the stock increases to $56.32. You then multiply the difference between the closing price and opening price by the unit you purchased, that is, $56.32 - $54.32 = $2, which you multiply by 3000 CFD units to get a profit of $6000.
N.B: Keep it in mind that you will need to pay a token as commission from your prediction. Also, you can keep your CFD long or short if you think it will rise or fall in its movement. Trading a contract of difference allows you to control and manage your profit or loss margins.
Types of contract of difference pricing
There are two types of contract of difference pricing namely, the selling price and the buying price. While the selling price is the price at which you begin selling a contract of difference, the buying price is the price at which you can begin selling the contract of difference. The difference in both leads to the profit or loss of the customer.
How to trade a contract of difference?
If you have not traded CFD before, it can as well turn to ‘Confusion Financial Doodads’, to check against this is why we have Defi.trade, a contract of difference trading broker which leverages on the open finance or blockchain models which makes trading a contract of difference a lot less technical and user friendly.
Benefits of trading CFD
The benefits of trading contract of difference are immense, but concisely, they include but not limited to:
Accessibility: contract of difference runs 24 hours a day and Defi allows you trade in all market.
Leverage: The profit margin of contract of difference is higher than the traditional system and wall street biddings. At least, you can get a profit percentage of 2% on your trading. The rates usually depend on the basal stocks or assets.
Cost: contract of difference usually incurs very low costs as brokers charge a token as commission which is usually fixed and based on the basal stocks or assets.
Trading flexibility: this allows you to buy, sell and trade for both long term and short term depending on market direction and prediction.
Performance: the nature of contract of difference allows orders to be transmitted immediately and Defi.trade can turn a capital over within one minute.
Limited risk: Defi studies market, makes prediction and analyzes it to ensure that its customer do not make a terrible purchase.
Conclusion
As an investor, you are probably thinking of where to enter your capital and a dependable market which is rarely affected by market fluctuations, right? If so, think Defi.trade, the world leading decentralized platform, though established this year, it has established it footing to stand shoulder tall ahead of its competitors to earn the tagline. The benefits of Defi are unlimited, and can only be experienced if you explore them yourself, so, get in.
For more information, visit the links below;
Website: https://defi.trade/
Telegram: https://t.me/defitradeexchange
YouTube: https://www.youtube.com/channel/UCKQ1pUh2yzivLazjLAN03yg
Author
Tobanoo
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