CFD stands for Contracts For Difference. It is a special kind of trading and it is also a very popular Over The Counter (OTC) financial derivative product. CFD online trading makes it possible for the trader to trade on the changes in the price of various financial assets highlighted below:
- Exchange Traded Funds
- Commodity Futures
- Indices Futures
CFD Trading Websites in Canada
CFDs enable the trader to carry out trading activities on the assets mentioned above freely even if the underlying asset does not belong to the trader. The trader will equally have access to the asset even if he has no obligation or right as regards the underlying asset. CFD Canada is highly flexible and this is one of their main benefits. They can be easily traded against the price movements without buying or selling the instrument physically.
You can trade CFDs if you think the price of a particular financial instrument will possibly increase in value or you are of the opinion that the value will weaken. The profit or loss you end up recording in CFD trading depends on the price differences between the buy and sell.
Some of the methods adopted by many who trade CFDs are highlighted below:
- Long position: A trader will take a long position in CFD trading if he buys the particular asset in question. This trading decision is made when the trader predicts that the value of the asset will rise. Such traders usually take their trading decision when the value of the asset is low and the trader buys it at the low value to enable him to make a profit.
- Short position: A trader takes short position in CFD trading when he forecasts that the asset will fall in value. This trading decision is usually taken when the price of the asset is at its highest and the trader can sell that asset for a good profit.
- InterTrader: This is a trading method in which the CFD trader takes either long or short trading decisions. Such a trader is usually active when the market is ranging. InterTraders usually make use of support and resistance to make their trading decisions.