What Are CFDs?
CFD is a trading tool that stands for ‘Contract for Difference’ and allows you to stake on securities without buying. you just have to go to the broker and invest some money and predict the future price of the security.
If you predicted correctly then you will earn profit which will be equal to the difference between the opening and closing price. But if your prediction goes wrong then you be in a loss equal to the difference as well.
CFDs are now available on IQ Option. It has created a storm in the trading industry. However, you need to know one thing, that trading using CFDs will bring a lot of risks.
But you have a chance to make a lot of money in a short period of time. But there is also a chance of totally opposite situation and you can end up incurring a huge loss. To avoid this you will need to have a proper strategy just like in binary trading.
Why Trade On CFDs?
CFD is a risky type of trading on IQ Option. Despite these risks, there are also some advantages that make CFD trading worth. Here are some other traditional methods of trading such as binary options.
Along with CFDs, there is a tool that is called Multiplier. With the help of this tool, you can invest more money on security than you currently have at hand.
This means, even if you have $900 in hand you can trade with $1800 by opting for 2:1. and that extra $900 is provided by the broker in IQ Option.
Well, Multiplier is actually where the risk lies. Even though the amount of money you can make might be tempting, you also stand the chance of incurring huge losses than you had anticipated.
It could go either way and that is the reason why most experienced traders always use a trading strategy.
If you are not planning to trade for a longer period of time then CFD trading is for you. As you can get profit in just a matter of minutes, many casual traders use this type of trading.
If you wish to trade on CFDs then you only need 15 minutes in a day to trade on it and make a profit. However, there are many traders who believe that better profits will require time and training.
Types Of CFDs Available On IQ Option.
Today, the world’s largest and most liquid market is the forex market. In forex market, you first buy a currency at a particular price which you expect to rise and after sometime when the price of that purchased currency has risen you sell the currency and get your profit.
With CFD also, the process is the same, here you can trade without buying the currency. You just predict and stand to make a profit as a difference between opening and closing prices.
Cryptocurrency has become very popular among traders. Some people in the financial community even believe that they will change the course of the world’s financial system.
Today, you have the chance to trade on these electronic currencies such as Bitcoin on IQ Option. So, you don’t have to buy those expensive computers in the name of mining.
3. CFD Stocks.
Now, you have a chance to trade with the world’s largest companies without having to buy their stocks. You just have to stay up-to-date with the news and current affairs on the corporate world to know where the market is going. Then analyse your data to understand market patterns and predict the future price of the stock.
Differences Between CFDs and Binary Option Trading.
The one major difference between these two is the limits of profits or losses you make. No matter how low or high the price has gone, the margin of profit or loss is fixed and remains that same in Binary Option.
But in CFDs, you stand to lose or gain as much as money as is the difference between the opening and closing price.
The main and major difference is in the flexibility of trading terms. Also, in binary trading you are not allowed to exit until the agreed trading time has ended. However, in the case of CFD trading, you can exit a trade whenever you want.
So in the case where you are making loses and there is no hope to recover you can easily pull out.
Why Trade With IQ Option?
If until here CFDs have impressed you then IQ Option is the best place to try it out. Here is why.
- It’s an All-in-one trading platform. IQ Option isn’t just a broker. Once you create an account with IQ Option you get access to a wide variety of trading tools. These tools include market news updates, calendars, warnings on volatity, newsletters and so much more.
- Smooth user experience. IQ Option is easily one of the biggest names in the trading industry. It has earned this position by providing its users with fast, smooth and reliable services. You can even opt to trade on the move using IOS or Android devices.
- Trading Support. IQ Option connects you to a community to support you on your trading journey. This is a place where you get to share ideas and useful information. And the best part is you get to do all this without having to leave the tradingroom.
Now you know all there is to know about CFDs. You are welcome to come try it out on IQ Option. If you have experience trading on CFDs then please leave a comment in the comments section below.
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