CFDs, what are they?

In accordance with the definition, CFD is one of exchange contract types that is used for gaining profit from asset price movement (currencies, shares, goods) on world financial markets. At the moment of purchase, asset buyer makes prediction regarding how the price of his asset will change. This financial instrument has fixed cost, known in advance time of the contract expiration and the amount of potential profit.

Typical example of CFD is bet on price increase or decrease. If you guess the price direction correctly, then you receive back the amount of your bet and 80-90% of pure profit. In case of the opposite result, you lose the amount of your bet. Most factors that influence price movement of an asset we use are already known, therefore, it is much simpler to predict the price movement direction. We do not have to guess the direction. It is enough to correctly analyze the markets and accessible economic information.

CFD and cryptocurrency trading have a lot in common with Forex trading. It is about both applied strategies and trading instruments. If you already have Forex trading experience, then it will be way easier to understand CFD and crypto trading principles. The majority of Forex strategies and indicators can be applied for CFD and crypto trading. In fact, any trading on financial markets requires definite initial skills. There is nothing difficult in the trading process itself. You buy a contract and in compliance with its conditions you either obtain the profit that is more than its cost or nothing. That is exactly what the large advantage of financial contracts is all about, everything is simple and rather transparent. Also, there is no need to support positions. You know all risks in advance, the contract will be automatically closed by the time of end of its expiration term.