Bearish or Bullish Market

There aren’t too many difference between CFD trading and shares or stock trading. The broker will find a good deal based on your desired price and the market’s current stock. CFD (contract for difference) is basically a binding agreement between a buyer and a seller (buy and sell) and the difference between the beginning agreed price and the underlying asset price, calculated when the contract closes. We should also mention that CFDs are leveraged products that have reduced brokerage fees and minimal margins, compared with the traditional stock or share market trading.

CFDs are OTC derivative (over the counter) and provide many advantages to the investor. The most important one is the stable strategy since the investor can open both short and long positions, thus they can close a position at any time and reopen it later, when they consider necessary.

Short selling, or short position, appears when you, as a trader, consider that the market will decline, thus you will open your position. If you want to open this short position, then you must finance the CFD cost from your broker, and later, when you will close the position at a higher price. Bear Market refers to the period when the market declines constantly for a determined period of time.

Long position is quite the opposite of short position, and it refers to those moments when you, as a trader, consider that the market will go up, thus you want to open a position and close it when you consider it is at its highest peak. Bullish Market (or Bull Market) refers to the period when the market increases over a certain period of time.

It is easier for a trader to make some profit on bullish market, compared with the bearish market. If you made your research and you can see a pattern on the graph and analyzed data then you can speculate if the market will fall or rise based on your data. You can make profit if you create a trading strategy that uses both short and long sections of the CFD trading market.

If you speculate the market properly then you can have huge profits but, in the same time you can have quite of capital loss if your prediction goes in the wrong direction.

Advantages of CFDs

Most reputable traders know CFD trading quite well. If you are not an expert then you should research and read more materials. CFD comes from Contracts for Difference and is basically a way to trade stocks and shares. CFDs are very flexible and can lead to huge profits. Because of this factor more and more people prefer CFDs instead of regular stock trading. CFDs offer you the chance to profit not only from price changes but from currency exchange, options, indices, binaries or commodities.

CFDs offer additional advantages like leverage, pliability, risk control tools and others. Leverage gives increased exposure on every position. Other advantages come from stop losses and risk management tools that permit dropping a trade at a desired level in order to minimize your loss.