CFD trading has become progressively popular in the financial markets over the last few years. But the sheer number of CFD trading platforms in the market is enough to confuse a trader. Click here!
CFD Trading for Beginners and Its Platforms
CFD trading is gaining widespread popularity in the UAE. However, as a beginner, understanding CFDs and their trading platforms is a critical first step. Read this post to know some of the most important things about CFD trading.
While CFDs have been around since the 1990s in the global markets, it is only in the last few years that they have started gaining traction in the UAE. The rising number of CFD trading platforms, encouraged by the business-friendly financial and regulatory environment, is one of the primary reasons for the rising popularity of CFD trading in the UAE.
If you are interested in trading CFDs in Dubai, understanding how they work and the platforms where they can be traded are two things that deserve your attention. Here are a few important things to help you begin-
What are CFDs?
Like stock trading, a CFD or Contract of Difference allows traders to speculate on securities such as stocks, currencies, and commodities. But unlike traditional share trading, where you buy and sell shares of an underlying asset, you trade contracts with CFD trading accounts. These contracts mimic the real-time prices of the underlying security.
The profit or loss in the trade is determined by the difference in the contract price when a position is opened and closed.
What are the Benefits of Trading CFDs?
Here are some of the top reasons why CFD trading is now a preferred choice for online trading in Dubai–
● Short-Selling CFDs
CFDs allow traders to make money from both rising and falling markets or securities. Apart from buying and then selling a CFD, traders can also first sell the contract and then buy it later, preferably at a lower price, to make a profit.
● Margin Trading
With share trading, if you’d like to buy 100 shares of a stock currently trading at $100, then you will need $10,000 for opening this trade. But CFDs work on margin. In the same scenario, you can purchase 100 CFDs with just 5%-10% of the overall trade amount required for taking the trade.
● Range of Tradeable Assets
While the number of CFDs will vary based on the financial consultant you select. The top investment firms offer extensive range of CFDs in stocks, forex, indices, and more across global markets. As CFDs do not require the traders to own the assets but only their contracts, they can access a wide range of tradeable assets with CFD trading.
What are CFD Trading Platforms?
A CFD trading platform is a software through which you can buy and sell CFDs. Most of the financial consultants in Dubai provide their customers access to either MT4, TWS, or CQG platforms used worldwide. Then there are other companies that offer all of these platform options to help the customers select one as per their requirements.
You can also find providers who have created their own trading platforms with advanced features and analytics to help traders find more profitable trading opportunities.
Trading CFDs as a Beginner in the UAE
Before concluding this post, here are some tips that beginners should keep in mind before they start trading CFDs-
- Practice in a demo account before trading in live markets with real money
- Start small and choose only a few different markets or CFDs when you are new
- Learn the popular trading strategies and indicators
- Always use a stop-loss
While CFD trading can be highly rewarding, it also comes with a significant level of risk. Focus on learning and practising to improve your trading skills and trading psychology. Choose a reliable financial consultant to begin your journey as several factors crucial to becoming a successful trader depend on your selected platform.