The popularity of CFD trading has touched new heights in the Indian market. CFD trading in India is the key to unlock several lucrative markets. However, when it comes to CFD trading, there are tons of questions that pop out. So, here we will break down everything about CFD trading and will know the best online trading platforms in India.
What is CFD Trading?
CFD is popularly defined as a contract of difference, which is incredible for derivative trading. The CFD trading is basically a systematic mechanism of speculating the fluctuations of prices of fast-moving financial markets such as shares, indices, forex, commodities, and more.
Merits of CFD Trading
In recent times, CFD trading has turned out to get more preference than the traditional investing methods. CFD is favorable due to its high ability to elevate the capital, giving better profits on investments. Here are some of the prominent merits of the CFD trading –
Maximum Leverage in Trade – CFD trading is your trump card if you don’t want to commit 100 percent of your capital to the trade. In CFD trading, the margin for opening a position is around 5 percent. Therefore, unlike the traditional investment methods where you need to invest the entire capital, in CFD, you can start with much lesser capital. For instance, if you wish to open a $100 position in top forex trading platform India, you just need to invest $5.
Higher Earning Potential – As we know, the market either behaves like a bull or like a bear. Unlike stock markets, CFD trading can make you profits in both the rising and falling markets. Therefore, as a trader, you get complete control over your investment and returns.
Low Trading Charges – In comparison to the traditional investment methods, CFD brokerage fees are much lower. In this type of trading, brokerages typically squeeze out money from the daily profits earned in transactions. This is extremely beneficial in terms of returns for the traders.
Is CFD Trading Legal in India?
One of the most common queries that come out from most beginners is whether CFD trading is legal in India or not. Well, the direct statement against this question is still under the wraps. (SEBI) The Securities and Exchange Board of India, to date, has not officially formulated any laws or regulations that define CFD trading as illegal. Therefore, any licensed websites do not deal in CFD trading. As there is no mark of authenticity in India, most Indian CFD traders favor using offshore service providers.
How to Trade CFDs?
Trading CFDs is one of the simplest processes if you have the right broker. Today the market is buzzed with fake brokers, who title themselves as so-called the best stock broker for beginners in India. But their sole aim is to blend out money from customers. However, if you manage to get hands-on with an experienced broker, CFD trading can be a piece of cake. Firstly, if you are new to CFD trading, you need to set up a trading account. Your broker can help you open a trading account hassle freely. Once you are set with a trading account, you must follow some simple steps to pick up your instrument and kick start trading. Here is a clear picture of how to start CFD trading step by step –
Choose the Instrument
The first step to start CFD trading is selecting between the various CFD options, i.e., Index CFDs, Commodity CFDs, and Share CFDs. To get in-depth knowledge about the CFDs, you can reach out to your broker’s contract specification page, where you will find illustrations on the instruments.
Choose Your Position
Once you have picked the CFD that fits your requirements, now comes one of the most crucial steps, i.e., choosing your position. Here you need to speculate the fluctuation in the market accurately. So, if you assume that your asset’s price will run down, simply open a short position (sell), or if you assume your asset’s price will touch the sky, open a long position (buy). The popular forex trading platforms India makes your judgments easier, offering you a bucket full of indicators, signals, and charts.
Choose the Platform
In today’s market, there are tons of platforms for CFD trading. Each day a new platform is jumping into the scene. So, be selective while picking up the best platform. Shortlist the best platforms equipped with top-notch quality CFD trading tools. Go for the flexible platforms that allow you to track your account from any device. Make a smart choice and fill your pockets with profits.
What is the key ingredient to being a successful CFD trader?
Trading is all about observing, analyzing, learning, and implementing. The root of a successful trader lies in learning. An educated trader aware of all the aspects of CFD trading can conquer the market. To become a successful CFD trader, you need to gain solid knowledge about the market. You must be able to craft top-notch and highly researched strategies that will help you take on the live market. Strategies are the keys to success in CFD trading. They teach the traders the art of speculating accurately, which helps them make better decisions.
How to Select the Best CFD Trading Broker?
Here are some principles to select a decent CFD trading broker, which is as follows –
Regulation: Before picking up a broker, make sure to check the license of the broker. Make sure the broker possesses an authentic license under any of the regulatory bodies.
Reputation: Today, there are hundreds of brokers in the market. Therefore, look for the best broker with a good reputation in the market. Look for customer feedbacks and testimonials to pick the best.
Customer Service: Make sure to choose a broker with quality customer service. Select a compatible customer support language and a fast service.
Choose the fees that fit your budget: Remember, commissions are paid to the brokers on every successful trade. Therefore, go for the best service under lower commission margins.
