Interesting Facts about CFD Trading and CFD Trading Commodities

To a newbie trader, CFD trading, CFD trading commodities, and related concepts could be extremely complex ideas. Hence, we introduce a complete guide on how to perform CFD trading with minimal investments, minimal losses, and maximum profits.

What is a CFD?

A CFD is a contract between 2 parties, a seller and a buyer, where the value transfer is obtained by the difference in the value of the current asset at the time of closure of the deal (i.e. starting position) and the final value at the time of expiration of the agreement (ending position). The full form of CFD is ‘Contract for Difference’. Trading in CFD helps businessmen to obtain profit from price fluctuations without having to possess the valuables. However, it relies more on the difference of value between a contract’s starting and ending points. This agreement is generally for the short term.

Range of CFD trading commodities

Different Trade union experts have come up with different opinions as to which set of financial instruments or commodities proved to be the best or most successful trading instruments so far. No perfect consensus has been achieved on this. While few traders are of the idea that only Forex currency pairs should be traded but not CFDs, others believe that the most beneficial result can be achieved by using other kinds of CFDs. A few other traders would like to opt for building a heterogeneous portfolio of assets, having various CFDs and currency pairs as well.

CFD trading vs futures: what is the difference?

Specialists of the trade union’s research team found out that the maximum number of Forex brokers in the market offer:

  • Commodity CFDs

These CFDs include the closure of an agreement for differences in commodities such as gold, dairy, silver, fertilizer, grains, oilseeds, corn, wheat, oil, oats, rough rice, barley, soybean, maize, coffee, lumber, etc. XAU/USD (Gold CFD) is one of the most traded commodity CFDs. The intra-day volatility lies within 1%. In this context, we can conclude that XAU/USD bears sufficient liquidity which is less compared to the other currency pairs.

  • Cryptocurrency CFDs;

Cryptocurrency СFDs are those trading instruments that hint at the closure of a deal for differences in major cryptocurrencies, like BTC, XRP, and ETH. This trading instrument is characterized by higher volatility (6-7 times more than the volatility of major currency pairs) and lesser liquidity compared to major currency pairs. It is worth mentioning that cryptocurrency CFDs are the latest trading instruments and that’s one of the reasons why they are offered by only a handful of brokers.

  • Index CFDs:

Being very famous among traders, and the popular ones include DAX, Euro Stoxx 50, US 30, US 500, CAC 40, etc. The most popular index CFD is S&P500 CFD and the spread for this instrument is 30-50 pips. On average, the daily volatility of US500 CFD happens to be 0.9-1%. On the basis of the given data, Trade Union experts have come up with a conclusion that this group of assets bears lower liquidity with respect to the main currency pairs, whereas the average daily volatility lies on the same level as commodity CFDs.

  • Stocks, ETFs, and Bonds

An expert group of Trade Union has added ETF CFDs, Bond CFDs, and Stock CFDs, under this asset group, stock CFDs being the most commonly used ones in the group. The Trade Union specialists studied the data for Apple CFDs in order to analyze the volatility or liquidity of these assets. And as per the findings, this asset group is differentiated by lofty volatility and an average liquidity level.

Saxo Bank and CFD trading

According to expert analysis, saxobank trading company is considered one of the finest and leading platforms for both active and passive trading in 2017. This includes CFDs especially, Forex, stocks, bonds, quoted options, and ETFs. Being a Danish broker, Saxo Bank traders are geographically distributed in countries such as Denmark, France, the UK, Slovakia, Singapore, Japan, Switzerland, UAE, Poland, Australia, etc.

Saxo Bank serves as a platform for seamless opportunities as far as trading norms and regulations are concerned having a minimum of 1 year of experience for professional traders offering a platform for 40000+ trading instruments.