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What is CFD Trading?

CFD Trading Explained:
Contracts for Difference (CFDs) are innovative financial instruments that allow traders to speculate on the price movements of various assets. These contracts are agreements between clients and brokers such as WM Markets to exchange the difference in the value of an asset from the time the contract is opened to when it is closed.

Why Trade CFDs:
CFDs encompass a broad range of markets, including Stocks, Forex, Cryptocurrencies, Commodities, Treasuries, ETFs, Energies, and more. This diversity allows traders to broaden their investment scope and capitalize on different market trends in both bearish and bullish markets.

The CFD Advantage:
A key benefit of CFD trading is the ability to engage in market speculation without the requirement of owning the underlying asset. Whether you anticipate an asset’s price will rise or fall, CFDs empower you to buy or sell units accordingly, offering the potential for profit in both rising and falling markets.

WM Markets’ Comprehensive Offering:
At WM Markets, we offer instant access to over 200 leading CFD instruments, including Stocks, Forex, Cryptocurrencies, Commodities, Treasuries, ETFs, Energies, and more, all at market-leading conditions. With benefits ranging from low trading costs to premium analytical tools, Copy Trading options, and our exclusive Loyalty Program, we give you all the resources you need to succeed in your trading journey.

Examples of CFD Asset Categories

Forex CFDs                     Australian Dollar, Swiss Franc, Euro Dollar, British Pound…

Stocks CFDs                               Apple, Ebay, Microsoft, Facebook…

Indices CFDs                              Dow Jones, Germany 30, Japan 225, Mini Nasdaq, Mini S&P 500, UK 100…

Energies CFDs                        UK Crude, US Crude, Natural Gas, Heating Oil…

Commodities CFDs               Sugar, Soybean, Wheat, Coffee, Corn…

Treasuries CFDs                     German Bund Futures, 2 YR/ 5YR/ 10 YR US Treasury…

Metals CFDs                             Gold, Silver…

Cryptocurrencies CFDs                             Bitcoin vs US Dollar, Bitcoin Cash vs US Dollar, Ethereum vs US Dollar, Litecoin vs US Dollar, Ripple vs US Dollar

  • Market Accessibility: Enjoy trading in forex, stock, and commodity markets 24/5, and take advantage of cryptocurrency trading available 24/7.
  • High Liquidity: Benefit from swift execution and competitive pricing in a highly liquid market.
  • Cost Efficiency: Increase your trading power with ultra-competitive trading conditions, including raw spreads from 0.0 and commissions from $0
  • Enhanced Trading Capacity: Utilize leverage to amplify the size of your trades, allowing for larger positions with less capital.
  • Profit in Any Market Direction: Seize opportunities to profit whether markets trend upwards or downwards.
  • Risk Management: Employ stop loss orders and strategic risk management to safeguard your investments.
  • Informed Trading Decisions: Leverage technical and fundamental analysis to make more predictable trading moves.
  • Multi-Platform Trading: Brokers like WM Markets enable you to access your trades through a variety of platforms, including desktop, mobile, and web, for convenience and flexibility.
  • Trade Automation: Opt for automated or semi-automatic trading with Expert Advisors (EAs) to streamline your strategy.

Understanding Margin and Leverage:
CFDs are traded on a percentage of margin, influenced by factors like contract size, leverage, pip value, and the direction of the trade.

Executing Trades:
Short Positions: To profit from a falling market, a client opens a short position at the Bid price and aims to close it at a lower Ask price.

Long Positions: To capitalize on a rising market, a client opens a long position at the Ask price and looks to close it at a higher Bid price.

Note: Additional fees may apply when trading CFDs.

Practical Example:
• Trading Microsoft Shares (MSFT):
• Contract Size: 1,000 shares
• Margin Requirement: 5%
• Account Leverage: 1:20
• Trade Execution: Client opts to trade 1 lot of MSFT, equivalent to 1,000 shares.
• Margin Calculation: Required margin for 1 lot = 1,000 * 96.85 * 5% = $4,842.59

Going Long: The client opts to buy 1 lot of MSFT CFDs, anticipating a price increase.
Opening Position: The trade is initiated at the Ask Price of $96.85.
Closing Position: The trade is closed at the Bid Price of $98.85.
Calculate the Total Profit: Difference in price = 98.85 – 96.85 = +2 * 1,00 = + $2,00

Going Short: The client opts to sell 1 lot of MSFT CFDs, anticipating a price increase.
Opening Position: The trade is initiated at the Bid Price of $96.85.
Closing Position: The trade is closed at the Ask Price of $98.85.
Calculate the Total Profit: Difference in price = 98.85 – 96.85 = -2 * 1,00 = -$2,00