CFD's Trading

Equiti Brokerage (Seychelles) Limited is a registered trading name in Seychelles (License Number SD064) which is authorized and regulated by the Financial Services Authority with its company address at First Floor, Marina House, Eden Island, Republic of Seychelles.

Introduction to CFD Trading

Trade CFDs with access to global markets and competitive pricing.

How CFD Trading Works

  • Opening a Position: Traders select an asset and decide whether to go **long (buy) if they expect the price to rise or short (sell) if they expect the price to fall.
  • Leverage: CFDs use leverage, meaning traders can open positions with a fraction of the total trade value. This increases potential profits but also increases risk.
  • Margin Trading: Since CFDs are leveraged, traders only need to deposit a small percentage of the total trade value, known as the margin.
  • Profit and Loss Calculation:
    1. If the market moves in the trader’s favor, they earn a profit based on the price difference.
    2. If the market moves against them, they incur a loss.
  • Closing a Position**: The contract is settled when the trader closes their position, and the broker pays or deducts the difference in price.

What is CFD Trading?

CFD (Contract for Difference) trading is a financial instrument that allows tradersto speculate on the price movements of various assets, such as stocks, commodities, indices, andcryptocurrencies, without actually owning the underlying asset. Instead of buying or selling the asset itself, traders enter a contract with a broker to exchange the difference in price from when the position is opened to when it is closed.

Advantages of CFD Trading

  • Leverage Increases Profit Potential
  • Flexibility to Trade in Both Bull and Bear Markets
    • Access to Global Markets from a Single Platform Lower Costs Compared to Traditional Stock Trading

Risks of CFD Trading

  • High Risk Due to Leverage: Losses can exceed the initial investment.
  • Market Volatility: Rapid price changes can result in quick losses.
  • Broker Fees and Spreads: Traders may incur additional costs such as spreads, overnight fees, and commissions.
  • Regulatory Risks: CFDs are banned in some countries due to their speculative nature.

Conclusion

  • CFD trading is a powerful tool for traders looking to profit from market fluctuations. However, it carries significant risks, especially due to leverage. It is essential to have a solid risk management strategy and understand market trends before engaging in CFD trading.

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