CFD trading has been the real revolution for online trading, especially for those who, perhaps like you, want to invest capital that is not excessive.
It is a type of trading that has really opened the doors of the markets to everyone and we recommend it as a first choice.
We never back down when it comes to explaining the reasons for our choices. And we will do the same with CFD Trading.
Why do we advise you to invest in the markets with eToro, a well-known CFD broker, and not, for example, through a classic securities deposit in a bank?
We will explain it to you in our in-depth discussion today.
An in-depth study that will allow you to understand why investing with CFD trading, which are the best brokers that allow you to do so and above all to learn the basics that will lead you to become autonomous in your choices.
What are CFDs and how they work
CFD trading is the world of investments with contracts for difference. The same world that you can access with brokers, either in demo or starting with a real account for only 10 pounds.
These are special derivative contracts that have been designed to offer the best possible conditions to everyone, especially for smaller investors.
Because they are instruments that follow the price of an underlying asset and therefore open to different possibilities.
But how does CFD trading work? We’ll explain it to you right away with an example, which we’re sure will be much more useful than many school definitions.
Imagine you want to invest in ENI shares, one of the most important securities on the Milan Stock Exchange. You could certainly start from your bank and buy shares directly.
But from the comfort of your own home, with just one click, you can buy a CFD contract instead.
You can also do this without investing real money right away, with a 100% free demo account, which allows you to invest for as long as you want with virtual capital.
The ENI share CFD contract follows the price of ENI shares 1:1. And if it goes up, the value of your investment will go up as well. And vice versa.
But if direct purchase shares are available, why choose CFD trading?
In a few moments we will show you all the advantages of this solution compared to what is offered classically by banks.
The advantages of CFD trading
We have prepared for you a brief summary of the real benefits you can get by simply going to invest with CFD trading instead of choosing a bank account for trading.
You can trade with less capital
If you want to trade with the bank, you can only approach the world of the markets with thousands of pounds.
Of course, there are banks that offer you the possibility to invest even with a few hundred pounds, but basically in that case they would offer you either incomplete accounts, or with very high commission costs.
The best brokers to trade CFDs offer you real accounts starting from a few hundred pounds and above all they allow you to have, no matter how much you have invested, everything you need to trade the right way.
And there are others, such as IQ Option, which even offer a real account with a minimum investment of 10 pounds.
This is a big difference between CFD trading and bank deposit.
You can leverage
Leverage has already been the subject of an in-depth study, to which we refer you if you would like to know more.
Here’s a brief summary: if you open an account, even a demo account, with FP Markets or any of the other brokers we recommend in this guide, you can multiply the performance of your investment.
This is because with CFD trading you can invest at the margin, i.e. only cover the price difference between the purchase and the current price.
Another huge advantage of CFD trading is that it allows you to make your 100 pounds behave as if it were 3,000 pounds, depending on the sector you choose.