The number of people trading CFDs using a top AI trading Singapore platform seems to be increasing almost every other day. And this does not come as a surprise if the numerous benefits that contract for difference trading has to offer are anything to go by. Better, people are now looking into alternative methods as opposed to trading through a financial firm or brokerage.
But how much do you know about contract for difference trading. If you can’t answer this question hassle-free, then you have certainly come to the right place. In this article, we will take you through some of the things you need to know before trading CFDs.
The Assets Commonly Traded
The good thing about CFDs is that you can trade all sorts of different assets. In fact, it is impossible to list all the assets you may decide to trade in. But some of the most commonly traded options include indexes, stock shares, currencies, and even commodities.
Among the most widely traded commodities in the CFD market include oil and gold. It is in your best interest to find out more about the assets commonly traded in the CFD market before making any decision.
Buying Vs. Selling
When it comes to CFD trading, you need to understand that some traders are buyers whereas others are sellers. Well, these are critical terms you need to understand when starting out with any AI trading Singapore platform. If this is not enough, the availability of buy and sell orders make it possible for CFD traders to profit off of gains or losses.
Keep in mind there are two types of margin when trading CFDs i.e. a deposit margin and maintenance margin. The deposit margin is needed to open a position whereas a maintenance margin is necessary if your trade gets close to incurring losses to be covered by the deposit margin or any other additional funds.
If this happens, you may get a margin call from your provider requesting you to top up the funds in your account. For those who fail to add sufficient funds, then the position may be closed with any losses incurred realized.
At no time should you rush into trading contract for difference without understanding what is expected. Instead, spend some time doing your homework, after which you can have a clear idea of what is bound to come your way.