Understanding the Financial markets
FOREX and CFD trading have many advantages, including margin trading, high liquidity and flexible trading period from Sunday to Friday.
Leverage trading is major characteristic of FOREX trading. A very low initial deposit is required to start trading. Our minimum margin requirement is 0.25% and leverage is 400:1.
Margin trading allows you to use your capital more efficiently, because you only need to provide a certain percentage of the total value of the position to be able to participate in the market. This essentially means that if market changes in your favor, the potential profits will increase; if the market changes against your favor, the potential losses will increase as well.
Please refer to the table below, to understand the difference between CFD trading and stock market, and pick the trading form that suits you best.
|Characteristic||CFD Trading||Stock Market|
|Can Long – Take advantage of stock price move up||YES||YES|
|Can Short – Take advantage of stock price move down||YES|
|Can Arbitrage – To reduce portfolio potential risk||YES|
|No Stamp Duty*||YES|
|High Leverage – Only invest small portion of product value||YES|
|Instant Trading – Quick entry and exit market||YES||YES|
|Access to other asset types – example: indices, FOREX, etc…||YES|
|Global Stock Markets – Can trade different stock exchanges stock||YES||YES|
|Receive dividends and interest adjustments||YES||YES|
|Actual Ownership – Eligible to participate in shareholders meeting||YES|
Unlike cash stock trading, CFDs are derivatives that allow you to take advantage of price volatility in thousands of markets around the world, including stocks, and without actually owning the real assets. As a result, there is no need to pay stamp duty.
CFD allows you to set up position (LONG or SHORT) according to your expectation of the assets value is up or down with a very low threshold, as compared to stock trading. Therefore, if you assumed Facebook stock price is overvalued, you can open a short position immediately.
Please take note that, in CFD trading you are trading against the market prices rather than specific assets.