Why Is CFD Trading So Popular?
Just this week, broker Core Spreads launched a new affiliate program, letting partners earn a capped commission rate. Besides indicating that Core Spreads is doing fine, this shows us how popular and successful CFD trading has become in recent years.
Trading is still a gray area to many, and the benefits are even more so. Just as people are afraid of the unknown, many will be reluctant to place any cash in a declining market, or a market they know nothing about. CFD trading makes both these issues much easier to handle, and as such, could be right for a brand new investor, or learning trader.
So, if you’re considering joining the game, here are some of the main reasons why CFD trading is so utterly popular.
Make profit in any market
Gone are the days when you absolutely needed a rising market to make a decent profit. With CFD trading, you can make profit in a declining market by selling short that particular CFD. This kind of trading rewards strategy, critical thinking and a keen eye. It’s not potluck. It’s careful thought and planning.
The same goes for a booming market, too. You can make hefty sums of cash by buying that CFD. Of course, making profit in a rising market will always be easier than a declining one. But in CFD trading, it’s irrelevant. You can thrive in any scenario. Other forms of trading usually rely on a successful market, and only money can make money. You can now dispel that notion!
It’s convenient, and simple
And that’s an understatement. If you’re already trading forex, it will be quite simple for you to trade a range of commodity CFDs on the same platform. The tools and software are largely the same and have similar functions. It’s not like CFD trading will feel absolutely alien to people who have traded in the past. It’s still an easy process.
Plus, it’s never been quicker and easier to get started with your trades. Most platforms are designed with this idea in mind, in order to aid usability. Many thoughts in the Plus500 review, for example, encompass this notion about that platform. Of course, if you’re new to trading, you still have a long way to go, but once you’ve learned it will be easy to jump between commodities.
Less ownership and commitment
There’s no fixed lot size when trading CFDs, so you have more options in terms of scale. Also, to begin a trade, you must only put down a small amount of the value of that total trade. You won’t need to account for the total cost. You’ll have more flexibility with your trades, and can be frugal where necessary.
Additionally, you aren’t required to own the commodity being traded. CFD traders aren’t at risk by taking ownership of any form of physical instrument. CFD is the representation of the commodity, if you will.
So, in short, CFD trading is a much more flexible option for those that desire it. It’s more secure, and carries less risk. Does that mean there’s less chance for greater profits? Maybe. But where certain trades can result in a heavy drop, CFD allows you to be more frugal, and more protected.