CFDs

CFDs are bought and sold like any other trading instrument. Therefore, if you believe prices of Crude Oil are going to rise then you would buy the Crude Oil CFD. You would then close the position by selling the CFD. Your profit or loss would be the change in price of the CFD between the time you entered and closed the position. Since CFDs are based on Commodity and Stock Index prices, traders use both technical and fundamental analysis to determine whether prices will rise or fall. For example, if a large storm is coming which could knock out Oil supplies, a trader could buy the Crude Oil CFD on the belief that a decrease in oil supplies will raise the price of Oil. Also, if a trader believes that stocks have risen too much and are overbought, he/she could Sell a Stock Index CFD to profit on any drop in equity prices. Another incredibly important concept on the currency market is the currency exchange, which is a key link in the chain of currency market trading services. Essentially, the currency exchange is a place where transactions are made. In this case, the currency is in free trade, shaping the process of constant currency exchange fluctuations. The main characteristic of the currency exchange is that exchange rates are shaped and noted as part of its operation, through the effect of supply and demand on the selling and buying of currencies. This very process is the main objective of the Forex currency exchange: shaping the exchange rates based on objective effects of the economic factors of specific countries. The currency exchange essentially regulates exchange rates. With the development of technology, more and more people today use the currency exchange online, trading in real time via an internet connection. The online currency exchange fulfils a number of functions besides affecting exchange rates: it lays the technical groundwork for free trade, creates and applies the rules for trading participants to enter (covering e.g. funds, business reputation), and creates the conditions and rules for making the transactions themselves. The obligation of monitoring observance of these conditions lies with the currency exchange as well. The largest currency exchanges are in London, New York and Tokyo. Thus, the online currency exchange can cover practically the entire world and provide nearly equal conditions for all currency market participants. This has made the Forex currency exchange the largest exchange in the world, with a turnover of more than several trillion dollars per day.

CFDs are bought and sold like any other trading instrument. Therefore, if you believe prices of Crude Oil are going to rise then you would buy the Crude Oil CFD. You would then close the position by selling the CFD. Your profit or loss would be the change in price of the CFD between the time you entered and closed the position. Since CFDs are based on Commodity and Stock Index prices, traders use both technical and fundamental analysis to determine whether prices will rise or fall. For example, if a large storm is coming which could knock out Oil supplies, a trader could buy the Crude Oil CFD on the belief that a decrease in oil supplies will raise the price of Oil. Also, if a trader believes that stocks have risen too much and are overbought, he/she could Sell a Stock Index CFD to profit on any drop in equity prices. Trading Foreign Exchange (Forex) and Contracts for Differences (CFDs) on margin carries a high level of risk. CLICK HERE to read the full risk warning.

Crude Oil CFDs track the price of the most current Oil Futures. If the Oil Futures are currently trading at $50/barrel, you will see the CFD traded at a similar price. Therefore, if you buy the CFD when the price of Oil is $50 and it rises to $55, you will gain $5 on the CFD, just like if you had bought the actual Futures contract.But, unlike regular futures, CFDs are available for much smaller purchase sizes and greater leverage. This makes CFDs an ideal product for investors that are looking to trade in the Commodity and Stock Index markets. A great benefit of CFDs is that they can be traded in small sizes. Also, like Forex instruments, large leverage is available for CFD trading. This compares to Futures contracts which are available only in large contract sizes and require a hefty minimum margin requirement per position.
With CFDs, Perfekt Capital Ltd allows you to trade position sizes of just 5 times the value of the S&P 500. Therefore, the minimum position size in our example would only be $5000 (this compares to $50,000 above). Also, Perfekt Capital Ltd has an initial margin requirement of only 2% of the contract size. Therefore, even if a CFD trader would take a $50,000 position like the real Futures contract, the minimum margin would only be $1000.