Trading with CFD Trading

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Investing and risk always go together . If you could get a lot of money without risk, everyone would have been rich. With any form of investing, your assets are at risk.

Yet there are some people who manage to become very rich, and often that is with investing. In, for example, shares, currencies, commodities or cryptocurrencies.

CFD trading (contract for difference) makes it possible to make large investments without a large amount. This is due to a so-called leverage effect .

This effect allows you to make bigger profits than you would with the same stake with normal investing, up to 30 times as much profit. But also bigger losses !

On this page:

Getting started with CFD trading

Before you even think about getting started, we would like to tell you clearly: "CFD trading is a form of investing. This involves risk. You can make a profit, but also lose your investment."

Of course we will give you tips on the things you should and should not do to help you increase your chances of success. But this is never a guarantee . Not willing to take a risk? Then you better look at options such as affiliate marketing or the category easy money .

Okay, suppose you want to start. Then you have to do two things:

1. Read yourself well (so read this page completely);

2. Register with a reliable broker.

You cannot just invest in CFD, it must be done through a good party that can be trusted. We therefore recommend Plus500 , also the sponsor of the major football club Athletico Madrid.

76.4% of retail investors suffer a loss when trading CFDs with this provider. It is important to consider whether you can afford the high risk of loss.

This is compared to 95% of investors who lose money across the entire industry, i.e. with all providers. This is shown by an investigation by the AFM. Advantages of Plus500:

A reliable trading platform - When it comes to financial products, stability and reliability should be the most important points. Plus500 therefore has the necessary licenses and is supervised:

  • Plus500UK Ltd authorized & regulated by the FCA (# 509909).
  • Plus500CY Ltd authorized & regulated by CySEC (# 250/14).
  • Plus500SG Pte Ltd, licensed by the MAS (# CMS100648-1) and IE Singapore (# PLUS / CBL / 2018).
  • Plus500AU Pty Ltd (ACN 153301681), licensed by: ASIC in Australia, AFSL # 417727, FMA in New Zealand, FSP # 486026; Authorized Financial Services Provider in South Africa, FSP # 47546.
  • You do not own the underlying value of your CFD order. You do not own or have any rights to the underlying assets. Read more about the conditions and risks .

Anyone Can Trade on the Plus500 Platform - The Plus500 platform is one of the most user-friendly platforms on the market, but it does contain advanced features attractive to more experienced traders. CFDs are "complex financial products" and can only be sold to people with experience in the financial markets.

Trading Diversification - Plus500 traders can trade CFDs with more than 2,000 instruments (Stocks, Indices, Commodities, Forex and ETFs) in more than 20 different markets worldwide.

Localization - Plus500 has a full range of services in the Dutch language and shows amounts in euros (Plus500 is available in more than 60 countries and 32 different languages). That way you can never misunderstand anything.

Trade on the go - In today's hectic daily routine, Plus500 traders know they can trade wherever they are. Plus500 offers program platforms for a full range of mobile phones and tablets especially for the busy entrepreneur.

Try it first - Plus500 offers a free (unlimited time) demo version . With this you can first practice with CFD trading without having to deposit money.

No Negative Balance - Unlike competitors, Plus500 customers cannot lose more funds than the funds they have in their account.

Trading CFD explanation

What is CFD

With contracts-for-difference you can trade in prices without having to own an actual underlying asset. For example: you can invest in shares or Bitcoins without actually having to buy them.

Underlying values ​​can be: stocks, indices (AEX), cryptocurrency, currency (FOREX), commodities and options.

The idea is that you only make an agreement about the price development. You want to take advantage of exchange rate differences. You make an agreement with the broker about buying a number of shares, for example, but you do not have to pay for all those shares. We call this opening a CFD position.

For example, you (the investor) open a CFD position worth 20 shares of APPLE at a price of $ 650. The value is therefore $ 13,000, - The investor only needs to hold 10% of the value on his CFD account intraday (leverage : read more about this later). This is $ 1,300 and is sufficient to take a position of $ 13,000.

The Apple share continues to rise to $ 675. The investor closes his CFD position. The value of the position then amounts to $ 13,500. The profit on this position amounts to $ 500.The investor (you) will receive $ 500 in your CFD account.

Trading long and short

In this way you can profit from both price increases and decreases. You "go long" if you think the price is going to rise, and you "go short" if you think the price is going to fall.

Lever

Because you do not have to buy the entire shares, you can profit more from price fluctuations.

For example, if you pay 10% as above for Apple shares, and Apple's price rises from $ 650 to $ 675. Normally if you had bought the stock and your profit was 8%. But because you make $ 500 profit with only $ 1,300 in investment, this is 38% profit. Conversely, your loss is also just as much greater if the price of Apple were to fall.

The leverage at Plus500 goes up to 1:30. This means that you can benefit from $ 100 to $ 3000 in capital effect.

Duration

Contrary to options, for example, there is no predetermined term with CFDs. You can decide for yourself when you buy and sell. Whether after a day, hours or minutes. Note: There are maturities when you open a CFD position for cryptocurrencies or commodities (gold, oil, etc.)

CFD tips

Recent research by the AFM (Netherlands Authority for the Financial Markets) shows that only 5% of investors in CFD actually make a profit. So 95% of the people lose or even break! We do not want you to belong to the latter group, so 4 rules of thumb to take into account. These still do not offer a guarantee.

1. No emotion!

This is the greatest danger to any investor in any form. You never make good decisions in panic. Above all, determine your strategy and stick to it. Think about the rate at which you want to buy and sell, and don't do crazy things in the meantime. You often see that people sell too quickly when they are at a loss to "prevent worse", and also take too little profit because they are afraid that the profit will disappear again. The result, on balance, is too many losses and too few profits.

2. Also turn off your "feeling"

You don't invest by feeling. Only open a trade if you actually have a good suspicion that a price is going to rise or fall. For example, if Apple comes with a new iPhone or the annual figures are good. So follow the news, read up, be professional!

3. Spread opportunities (and risk)

Don't throw all your money on one trade. Prefer to spread your chances over several stocks so that you can never lose everything at once. You are not at the roulette table in the casino! Something unexpected can always happen that you don't see coming ... the banking crisis no one saw coming, and neither did the crisis in the housing market. Look what that did to the stock markets, they went down completely!

4. Practice first

Don't just gamble with your money. You should have read this page carefully, then first create a practice account or start investing with small amounts. Only when things go well do you start to perform this.

CFD risk

The leverage as discussed above ensures that you can make extra large profits, but also extra large losses. According to research by the AFM, 95% of CFD investors lose money. At Plus500 this is 76.4%. So you have to consider whether it is worth your while to risk losing money.