CONCEPTION OF CFDS AND FOREX TRADING

What are CFDs

CFD is a contract (agreement) defined as the approval with the counterchange of difference between the opening and closing price of the financial instrument traded on the underlying asset (stock, index, and commodity).

CFD or contracts for difference are investment instruments, which enables the traders to participate in the price movements of stocks or indices, without the physical owning of the particular asset.

CFD Trading is an effective and comfortable speculative tool for trading stocks, indices, futures and commodities.

Similarly as commodity futures, indices and trading of stocks using margin, the CFD are effective approach to market participation. It is possible to sell easily stock indices or share as to buy it. Online traders are still more looking at this quickly spreading investment product as an effective approach to the market participation.

The main feature of CFD is, that instrument together with the contract is not in the trading process physically delivered. It means that you can for example buy the CFD on 200 stocks of IBM instead of buying 200 IBM stocks on the exchange. It is comfortable, because you can make an agreement regarding offered financial instruments in any time you want and in the full extent, what could be exacting in case of trading with exchange contract themselves.

How are CFDs functioning

CFD is a margin product. In other words, all negotiation with these contracts is done in the same pattern as those with currency at Forex markets including providing particular leverage. Deposited margin can differ for particular instruments.

CFDs are traded immediately, so you don’t have to wait for execution on trading floor of the exchange, or for the time consuming transfers and administration of traditional stocks.

In the practical terms investing to stocks through CFDs offers similar opportunities to profits/losses as trading stocks in traditional way.

In the comparison with classical futures, in CFDs trading you don’t have to deal with such matters as the concrete contract months, dates of expiration and delivery, conditions and commissions for roll-over of the contract and so on. Everything is made automatically in CFDs trading, it is easier!

There is minimum price slippage on Stop and Limit levels. GCI guarantee minimum price slippage for all CFDs. Stop and Limit orders on the nearest best possible price. GCI dealers will during seconds for the best possible price activate your order depending on the liquidity, in the frame of immediate price movement. You should count with the slippage of several points for very volatile commodities such as Gold, Copper, Crude oil, Natural gas etc. if the market is less liquid. The Slippage can be positive or negative according to the direction of the price movement and the type of entered order Stop or Limit. The Slippage of very volatile markets is minimal against trading on classic commodity futures markets. That’s why electronic CFDs trading with GCI is safer and more comfortable.

Open your CFD Demo Account for free...

You can find further information about CFDs in the main navigation, the button CFDs Trading. Compare CFDs trading with Futures, Stocks and Options trading!

Forex Trading Conception

Forex is worldwide currency exchange, which is the largest market in the world with the turnover more than $ 1, 5 billions daily. It is an international, global, electronic, highly standardized market with currencies, on-line 24 hours a day. Forex is not usual market. It doesn´t have any centre. Trading on this market is done via computer and telephone switch-boards of the makers of this magnificent market and brokerage companies. 

The principal mechanism of the Forex is that four basic currencies – the Japanese Yen, the Swiss Frank, the Euro EUR, and the British Pound compete with the US Dollar USD. In connection with main currencies are at the Forex exchange traded other 25 – 30 currencies with a different size of cohesion with world currencies. Trading at the currency exchanges (Forex) is done on the basis of margin trading. Relatively small margins are required to open much bigger positions at the market.

It is necessary to have two currencies (cross rate) to trade, where in one of them you will be in the long position (buy) and in the second in short (sell). The currency trading is based on the principle of the price movements. You can open long and short positions (it means buying or selling your main currencies). With closing the position there is done the opposite trade. The loss or profit will appear in the difference between the quantity for which the currency has been evaluated and chosen in these two transactions. Your broker will automatically exchange your profits or losses to your basic currency, usually USD.

Fortunately with the Forex trading there are not any daily limits and any constraints regarding the trading hours. It means, there will always be the possibility to respond to the main currency markets movements. Corresponding to this there is lower risk to be caught without the possibility of closing some of the positions.

The investors on the forex exchange are provided with the spread, which provides the buy and sell levels of the trade.If the investor accepts offered price and receives the confirmation, the trade is being executed. It is not necessary to call the floor market.

Open your Forex Demo Account for free...