Plus500 Trader’s Guide | What is CFD Trading? (AU)


Hi, in this video we will introduce CFD trading. A CFD, or contract for difference, allows you to trade on price changes of a financial instrument – in real market conditions without the need of owning it. CFDs are offered for assets such as Forex, Shares, Commodities, Indices and more. CFDs are leveraged, meaning you can use a relatively small amount of capital, known as margin, to gain larger exposure. For example, a leverage ratio of 1 to 20 means you can open a trade valued at 20 times your capital. Let’s say gold’s price is 1000. If you think it will increase in value, you can open a Buy trade. Or, if you think it will decrease in value, you can open a Sell trade. Your profit or loss is determined by the difference between the trade’s opening and closing prices multiplied by the amount of contracts. So, what are the main features of CFD trading? You can use leverage to multiply your position size. Opening Sell positions is just as straightforward as opening Buy positions. A relatively small amount of money is required to start trading. Want to learn more about trading CFDs on Plus500? Check out our website.

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