Basic of CFD's
Contracts for Difference (CFDs) are simple derivative instruments that can be based on currencies, commodities or stock exchange indices
This section explains the basic concepts related to investing on financial markets, using Contracts for Difference (CFDs) on the trading platform MetaTrader 4 provided by Silver Stone FX. It is addressed to everyone who is willing to take the first steps and get to know in practice the world of currencies, commodities and stock exchange markets.
In order to take maximum advantage of this part, it is advised to combine its lecture with practical exercises on our trading platform. If you are new to the concepts presented here, we recommend that you read this article, make sure that you have already downloaded the MetaTrader 4 platform and successfully opened a demo account, and then come back to the key points in order to figure out how to do the work in practice. There is also a bit of simple mathematics involved in explanation of some of the key issues – understanding it at this point makes all the other steps much easier.
The main topics covered in the section include:
- Long market position with CFD - what exactly is the Contract for Difference (CFD), and what does it mean to take the “long” position on a market?
- Short market position with CFD – what does the “short” position mean and is it possible to achieve gains on a bear market?
- What can I trade? - with CFDs is it possible to trade on several different markets from one single trading platform MetaTrader 4.
- What is bid, ask or spread? – explanation of basic terms associated with CFDs. How much money can I control? - insight into the nominal value of the financial instrument transaction.
- What is financial leverage and margin? - CFDs are derivatives instruments that involve a financial leverage mechanism. Here we explain this concept in more details.
- How much can I earn or lose? - to understand what is at stake, it is important to know the value of transaction and each point.
Please feel free to get acquainted with all the sections presented.
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