Discover 7 Unexpected Advantages of CFD Trading
2 min read
Despite the restriction of the United States Securities and Exchange Commission on CFD Trading due to its risks and its nature, the market for CFDs in other parts of the world where trading for such financial instruments is legalized.
With regards to the known influence and power of the United States, it is amazing to see that other countries were not influenced by the rules that were set by the US regarding CFDs.
Hypothetically speaking, other nations have more lenient trading regulations for derivatives due to these surprising advantages that they can offer to the enthusiasts.
7 Surprising Advantages of CFD Trading
- No expiry dates
We have been accustomed to contracts bearing expiry dates. But in this case, CFDs are exempted. Compared to options or futures, the clients pay an interest charge for this instrument this is why it doesn’t have an expiry date.
- CFDs have been existing for decades
CFDs are not very new in the market. In fact, this financial instrument has already been circulating in the market since the 90s. Most traders have known CFDs as a form of equity swap that was traded for margin.
- Variation of Rates
Since rates for CFDs are defined by brokers or the seller, rates vary from one brokerage firm to another. Because of this variation, a client is given the option to search for a trading partner that suits his preferences based on the services offered by the broker and their platform.
- Multiple Exposure
With CFDs you do not need multiple accounts to expose you to a wide range of financial markets where you wish to involve yourself. This feature is not so common in other instruments because most accounts would require you to sign up for another account if you wish to diversify your market portfolio.
- Versatility of Trading Options
Aside from enjoying the privilege of multiple market exposure in a single account, CFDs also make way for multiple trading options. This means that traders are given the freedom to trade in a rising market,falling market or even both.
- Absence of Stamp Duties
Such a feature is advantageous for traders because they no longer need to spend money for stamp duties. Therefore you get around 0.5% additional amount in your profit.
- Ability to Offset Losses on Tax
You may not believe this but it turns out that CFDs being taxable has something good to offer to those who are into its usage because it can be utilized to offset your loss.
Conclusion:
The remarkable features of CFD Trading may seem so good to be true but these advantages make CFDs a great asset to those who know how to handle its risks. Despite being dubbed as an unrecognized instrument in the US, this type of derivative is a potential investment that could give you a satisfactory amount of profit. That is why it is necessary to master techniques and strategies that are applicable for such a trading field.
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