Referred to as the Contract For Difference (CFD) it offers traders and investors alike the opportunity to generate profit from the price movement without having to own the underlying asset. CFD trading is available across the US, European & Asian stock indices.
It’s a relatively simple method calculated by the asset’s movement between trade entry and exit, computing only the price changes without consideration of the asset’s underlying value. This is accomplished through a contract between client and broker, and does not utilize any stock, forex, commodity or futures exchange. Trading CFDs offer several major advantages that have increased the financial instruments enormous popularity in the past decade. Beware as there are also many fake websites that look extremely legitimate with all the legal jargon together with pictures and embellished testimonials from fake traders.
If you have been a victim of one of the fake websites and you have sent money, we are able to assist in the recovery of your funds by lodging a dispute and we do full follow up throughout the process, we specialize in this field and our staff are here to help you. You might have been encountered or been exposed to some of these CFD trading methods used to make it look like they are legitimate.
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CFD Trading Methods
There are 3 main CFD trading strategies that are often used, to make it look like even the most unskilled trader should be able to understand
Long Position
A long position in trading CFDs occurs when a trader purchases the asset. This will mean that the asset will rise or see an increase in value over the life and time of the assets contract.
Short Position
The short position is most commonly used when the trader thinks there will be a decline in the assets value and a ‘sell’ order is selected, however there is an opportunity for the trader to buy the asset contract back at a later stage.
E.g.: A short seller’s expectation is that the price of the asset will fall over the life of the contract. If his prediction is wrong and the price of the asset starts to rise the open trade will sustain a loss, which is calculated by the difference between the opening and closing price of that asset over that time. The reverse is true should his open trade indicate that the asset chosen would decrease in value. This is a very high-risk trading strategy and can be susceptible to manipulation.
InterTrade Position
This could be a less volatile medium that offers both updated futures and contracts and can be traded on short or long term CFD strategies.
The perceived advantages of trading CFDs is exactly what the scammers are relying on to entice naive investors, below are some of the key advantages that they will use to convince new investors.
CFD’s Never Expire
The premise is that where there is a rise generally it is followed by a fall and it is a continuous market cycle.
Hedge Trading
This is a buffer for trades if the trade is not going in the intended direction you can open the equivalent position in the opposite direction.
Leverage Trading
Leverage methodology is a double-edged sword, as it can significantly increase potential gains but you would have to trade a high volume to be able to withdraw any funds.
Multi-Asset Investment
The ability to trade a range of assets on a single trading platform, although these assets don’t exist and the client does not engage the markets in the first place.
Trading Rising & Falling Markets
The ability to trade a range of assets on a single trading platform, although these assets don’t exist and the client does not engage the markets in the first place.