Profits from raising and falling markets
With CFD trading investors can benefit from rising or falling markets, because they trade on the price movement of a financial instrument, but do not own it physically. This means that they can easily buy and sell CFDs on various instruments. In a rising market, a trader opens a buy position first and sells it at a later date to close out the position. In a falling market, a trader opens a position first and buys it back at a later date to close out the position.
Trading with leverage
CFD trading is leveraged and traders can enter into a CFD contract using funds that are only a small fraction of the actual value of an underlying instrument. The leverage for stock CFDs offered by IFC Markets is 1:40 (margin 2.5%). Lower margin requirements mean less capital outlay for traders, as well as greater potential returns. However, leverage also carries a high degree of risk, in case the market moves against you.
No day trading requirements and various trading options
There are markets, which require minimum amounts of capital for day trading, or have certain limits on the amount of day trades, which can be made within certain accounts. Such restrictions don't exist in the CFD market, so traders can day trade if they want. Though $2,000 and $5,000 are considered to be common minimum deposit requirements, accounts can be opened for as little as $1,000. With CFD trading, you have a vast variety of trading options, including stock, index, treasury, currency and commodity CFDs, also sector CFDs are now available.
Thus, it has become more convenient to trade stocks through CFD rather than in past, when trading conditions were far away of being this much favourable. Today the market is full of brokers that offer trading these instruments and the only thing to do is to compare the trading conditions and find the one corresponding to trading goals in a better way.
One of such, IFC Markets CFD broker charges starting from 0.1% fee of the stock CFD position volume and no commission is charged while closing a position. What is equally important to know about stock trading is that for stock CFDs the spread is floating that corresponds to the real stock exchange trades in a better way. The number of instruments is constantly increased by the company thus providing an opportunity of a wide choice. Currently traders can trade from Chinese, Russian, German, British, Japanese and US markets. Traders that prefer high stock leverages can take advantage of up to 1:40 that is quite high for stock market.