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Tuesday, December 6, 2016

Benefits of CFD Trading over Stock Trading

Contract for Difference (CFDs) are considered as more flexible trading instruments than stock and indices. Here are some of the advantages of CFD trading over stock trading.

Trading Products across the Globe: While stock trading is limited to a handful of country specific or market stocks, CFD traders can trade products in all world markets. Trades can be executed anytime the market is open on the trading platform. Click here to know the CFD range of products Orient Finance offer. 

Better Leverage: CFD trading involves higher leverage than stock trading. Generally stock trading involves 50% margin requirements, meaning you should have capital of 500 for trading a contract size of 1000. But the CFD trading margin ranges from 1% to 20% depending upon the liquidity of the underlying asset. Fore example with 5% margin, one can trade 1000 worth contract with just 50 as capital investment.

No Day Trading Requirements or Shorting Rules: CFD trading has much relaxed rules and regulations than stock trading. There are no day trading requirements; traders can day trade whenever they want. At times stock markets can restrict traders going short; but in CFD trading one can go short any time they want as there is no ownership of underlying asset, no burrowing costs or shorting costs.

Getting Trade Executions with No Fees: Like online forex trading, CFD trading does not involve any trading commissions. The difference in ask and bid spread is the broker's remuneration. This spread is often fixed and usually there are no hidden charges or additional fees. Moreover CFD brokers offer all order types as traditional stock brokers offer.

And a Range of Products: Now CFDs are available on a wide range of underlying products. These include currency pairs, shares, stock indices, commodities, treasury products and more.

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