CFD Basics

With CFD trading, you can take advantage of market fluctuations, however minor they are, even if they are downward movements, without having to own the actual underlying asset.

What is CFD Trading?

A CFD is a tradable instrument that mirrors the movements of the underlying asset. It allows for profits or losses to be realized when the underlying asset moves in relation to the position taken, but the actual underlying asset is never owned. Essentially, it is a contract between the client and the broker. Trading CFDs has several major advantages, and these have increased the popularity of the instruments over the last several years.

What Makes CFD Trading Unique?

The Advantages to CFD trading include lower margin requirements, easy access to global markets, no shorting or day trading rules and little or no fees. However, high leverage magnifies losses when they occur, and having to continually pay a spread to enter and exit positions can be costly when large price movements do not occur. CFDs provide an excellent alternative for certain types of trades or traders, such as short- and long-term investors, but each individual must weigh the costs and benefits and proceed according to what works best within their trading plan.

When trading CFDs, you do not actually own the underlying product; you are just speculating on its future value.

Please Note - Our service includes products that are traded on margin and carry a risk of losing entire deposit. The products may not be suitable for all investors. Please ensure that you fully understand the risks involved.

Why Trade CFD?

24 Hour Market

Trading goes on all around the world during different countries' business hours. A true 24-hour market from Sunday 5 PM ET to Friday 5 PM EST, Forex trading begins in Sydney, and moves around the globe as the business day begins, first to Tokyo, London, and New York. Unlike other financial markets, investors can respond immediately to currency fluctuations, whenever they occur - day or night. Eastern Standard Time (EST) refers to local time in New York.

Precious Metals and Commodities are also available for trade 5 days a week, as well as Share CFDs and Indices. These products may be subject to trading breaks in the underlying markets.

Trade Long or Short Positions

When a currency pair is long, the first currency is bought while the second currency is sold short. To go long on a currency means that you buy it, hoping that the price will rise. A short position occurs when the first currency is sold while the second currency is bought. To go short on a currency means that you sell it, hoping for a decline in the market price. If you think a currency will go up, buy it. If you think it will fall, sell it. This means there is no such thing as a "bear market" in Forex - you can make (or lose) money any time.

In addition to Forex, all other CFD products traded on our platform can be traded long or short.

Low Trading Costs

Bacera offers exceptional value at a low, competitive cost. Our CFD trading accounts feature comparable commissions and tight spreads that are transparent and easy to understand. Please refer to our PDS for details regarding Bacera’s spread and commission structures.

Trading on Leverage

CFDs provide much higher leverage than traditional trading. Standard leverage in the CFD market begins as low as a 2% margin requirement. Depending on the underlying asset (shares for example), margin requirements may go up to 20%. Lower margin requirements mean less capital outlay for the trader/investor, and greater potential returns. However, increased leverage can also magnify losses.

No Physical Purchase

Full Market exposure with no physical purchase.

Low Transaction Cost

Low transaction cost compared to "traditional" trading.

Profit from both ways

The ability to profit from rising or falling markets.