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Trends & Analysis
News
Kroger tops Q3 views amid steady grocery demand
News
XPeng shares skyrocket despite sales miss
News
Oil burns brighter on China easing restrictions
News
Pinduoduo’s shares hit 52-week high after Q3 print
News
China stocks end mixed despite PBoC announcement
News
Asia stocks rise on prospects of Fed easing hikes

CFDs & spread bets are complex instruments & come with a high risk of losing money rapidly due to leverage. 73% of Retail investor accounts lose money when trading CFDs & spread bets with this provider. You should consider whether you understand how CFDs work & whether you can afford to take the high risk of losing your money.


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An introduction to CFD trading

 

A Contract for Difference (CFD) is a simple way to trade many global financial instruments. They are the type of derivative that enables you to trade the price movements of these financial markets with us – you won’t own the underlying asset; you will only get exposure to its price movements.

 

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Why trade CFDs?

 

CFDs are a flexible form of trading that allow you to take advantage of both rising and falling markets. When trading CFDs you are predicting whether an asset price will rise or fall.

If you think the price will go up, you ‘buy’ (go long) and if you think the price will fall, you ‘sell’ (go short). The outcome of your prediction will determine whether you make a profit or incur a loss. You can gain access to multiple asset classes, including Indices, Metals, Commodities, Treasuries and Equities.

Advantages of CFD trading:

Flexibility: go ‘long’ or ‘short’ to capitalise on either a rising or falling market.


Leverage: magnifies both your potential profit and loss, so it’s important to understand the risks involved. CFD trading uses leverage to enable you to get market exposure for a small initial deposit, known as margin.


Global market access: trade the world’s major markets across a variety of asset classes, including indices, equities and commodities.

How to trade CFDs

 

Why are there two prices for each CFD?

In CFD pricing there is a bid price and an offer price. These are the price levels that you can sell at (the bid price) or can buy at (the offer price).

If you anticipate that the price of an instrument like a stock index or a commodity will increase, you open a buy (long) position with a view to exiting this position when the instrument has reached a higher price. Alternatively, if you anticipate that the price of an equity or a bond is likely to fall, then you open a sell (short) position with a view to exiting this if the price goes lower.

What does ‘sell’ a CFD mean?

How can you sell something you don’t already own? The concept of opening a sell position (or going short) in CFD trading, means you are taking the view that you think a price will fall – even though you don’t own the underlying asset.

What do the prices mean?

Our CFDs will be traded in the underlying currency of the symbol, unless otherwise specified on our market information sheets. For example: a CFD on the US Dow Jones equity index will be traded in US Dollars, while a UK equity like Vodafone will be traded in British Pounds.

 

Three steps to start trading CFD’s with ADSS:


1.  Submit your application – access our MT4 trading platform.


2.  Fund your account – via bank or online wire transfer, debit or credit card and Skrill.


3.  Place your first trade – with a wide range of CFDs and currency pairs.

CFD Trading

We offer a range of trading tools and charts to support your CFD trading. Our comprehensive charts display live market prices for some of our most traded instruments. For example: when trading currency pairs such as GBP/USD you can look to identify trends and use this information to inform your CFD trading decisions.

Trading tools can be useful for you whether you’re an experienced trader, casual trader, or a beginner. However, for those of you who are just starting out they can also be a great way for you to develop your analysis skills and help you to better understand the markets. Equally, they can still help experienced traders by providing potentially valuable insights into some of our most popular traded instruments and can help you to better recognise the potential risks.

Spread price information

Generally the spread refers to the difference between the buy and the sell prices, known as the bid-ask spread.  Spreads will differ depending on the time of day and whether the market is open or not. 

FX

GBP VS USD (CFD): Buying one lot

When you hold a CFD or spread bet account with ADSS, you trade forex in lots. We offer standard, mini and micro lots, where each lot has a size of 100,000, 10,000 and 1,000 of the first named currency respectively.

Let’s say you think the GBP will strengthen against the US dollar, so you decide to go long, i.e. buy the GBP/USD currency pair. The pair is currently quoted at 1.2915-1.2916. The spread is the difference between 1.2915 and 1.2916, or one pip. Since you are looking to go long by one standard lot, (let’s say 100,000 GBP), you will be buying at the ask (or offer) price of 1.2916. One week later, the pair is quoted at 1.3015-1.3016 and you decide to take your profits by closing your position and selling GBP/USD at 1.3015. The profit for the trade is therefore 1.3015-1.2916 * 100,000, which is 99 pips. This equates to a monetary profit of $990. The profit is always in the second-named or the quote currency.

 

EUR VS USD (CFD): Selling one lot

Let’s say you think the euro will weaken against the US dollar, so you decide to go short, i.e. sell the EUR/USD currency pair. The pair is currently quoted at 1.1601-1.1602. The spread is the difference between 1.1601 and 1.1602, or one pip. Since you are looking to go short by one standard lot, i.e. 100,000 EUR, you will be selling at the bid price of 1.1601. One week later, the pair is quoted at 1.1700-1.1701 and you decide to take a loss by closing your position, i.e. buying EUR/USD at 1.1701. The loss for the trade is therefore (1.1601-1.1701 * 100,000), which is 100 pips. This equates to a monetary loss of $1,000. The profit is always in the second-named or the quote currency.

There will be a holding cost incurred when forex trading. This will be the difference between the interest rates in the currency pair. You should always ask your broker for these costs before you trade.

 

Indices

If UK100 is trading at a selling price of 7,579 and a buying price of 7,580:

UK100: 7579/7580

If you expect the price of the UK100 to move up, you BUY ten contracts of UK100 (each contract = £1 per point).

Scenario A: You bought at 7,580, the price goes up to 7600.00/7603.00 and you wish to take your profit. You sell your position by closing it at the selling price of 7,600. Your total profit = (7600.00 – 7580.00) x 10 = £20 x 10 = £200

Scenario B: You bought at 7,580.00, the price goes down to 7560.00/7563.00 and you wish to limit your losses. You sell your position by closing it at the selling price of 7,560.00. Your total loss = (7560.00 – 7580.00) x 10 = -£20 x 10 = -£200

 

Learn. Explore. Pursue more.

 

Join our trading community to access our free weekly webinars, and our library of tutorial videos and how-to guides. Designed to help you navigate the index, forex, equities and commodities markets and analyse the latest news and insights.

 

Learn how to
spread bet
 

Spread bet to trade on the price movements of a wide range of markets.

Learn how to
trade CFDs
 

Master the highs, the lows, the longs and the shorts of trading Contracts for Difference (CFD).

Learn how to
trade Forex

 

Get to know Aussies, Guppies and Loonies – you’ll be trading FX pairs in no time.


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CFDs and Spreadbets are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of Retail investor accounts lose money when trading CFDs and Spread Bets with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

ADSS is a trading name of ADS Securities London Limited, a company registered in England and Wales with company number 07785265 (VAT Registration Number: 212722447). Registered address 9th Floor, 125 Old Broad Street, London, EC2N 1AR. ADS Securities London Limited is authorised and regulated in the UK by the Financial Conduct Authority (FRN 577453).

The information on this site is not directed at residents of the United States, Canada, EU or any particular country outside the UK, and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law.

All opinions, news, analysis, prices or other information contained on this website are provided as general market commentary and does not constitute investment advice, nor a solicitation or recommendation for you to buy or sell any over-the-counter product or other financial instrument. Please ensure you understand all risks and seek independent advice if necessary.