If you’ve been contemplating trading for some time, you may be weighing up different ways to enter the market. With everything from stocks and shares to forex, binary trading and more, there is a diverse and broad range of options.
For many people, CFDs are an excellent financial instrument which offer more benefits compared to other types of trading. Here’s a look at the benefits of CFD trading and why it’s something you should consider for 2021.
Easy to Get Started
To become successful in CFD trading, you don’t need to overcome the same kinds of obstacles that are present when investing in traditional stocks and shares, or purchasing goods. Instead, CFDs are a way of speculating on the price of a specified asset, and profiting if the market moves in the direction that you predict.
This means that you don’t need to deal with the complications of acquiring assets or disposing of them. There are no tax implications from the purchase and sale of items. There are no physical logistics to overcome, such as the space to store resources.
With CFDs, you are using analysis and knowledge to forecast how much an asset will be worth in the future, a simple transaction that is accessible to everyone.
Choose Your Strategy
Investing in CFDs means you’re not committed to a definitive expiry date. You can hold your position for as long as you want, or close out if you feel the time is right. It might be because you’ve reached the level of profit you want to take or recognise that the market is heading in the wrong direction and want to limit your losses.
This flexibility means you can use CFDs for day trading or hold longer positions to hedge other investments.
If you plan to ride out the market, you will need to consider leverage and make sure your position won’t be automatically closed. However, this aside, the decision about how to manage your CFDs is entirely yours, leaving you in complete control of your trading.
Volatile Market Conditions
After a tumultuous year in 2020, sentiment for 2021 is mixed. There’s no real consensus about whether it’s likely to be bullish or bearish overall, although some sectors seem primed to do well, such as cryptocurrency.
The advantage of CFDs is that you can continue to trade and profit, even at a time when prices are falling. You don’t need to rely on price growth in order to make money, providing you’re able to accurately predict direction of movement.
This is because you can short CFDs, as well as going long. No matter whether a market is rocketing or plunging, you can speculate with CFDs and close out whenever you want.
Global economies remain very fragile and during uncertain times, being confident about being able to continue to trade regardless is a genuine plus.