CFD or contract for difference is prevalent in the trading farms nowadays. It attracts more and more traders all over the globe and the usual question that resurface every now and then is “is it scam?”
What is it?
CFD is a product that enables you to trade many of the world’s global markets in just a single account. The trade is possible through leverage.
It allows you to trade indices, commodities, foreign exchange and of course, share CFD on many of the existing markets in the worldwide basis.
What’s the real story?
CFD is not a scam. It is a product that enables you to access all the open markets available for trading.
So, if CFD is not a scam then how come people lose more money on this kind of trade?
We can’t emphasize enough…
The big problem is that people do get caught up with the improper use of leverage on their trades. With CFDs, you’ll be able access a lot of leverage and in some cases it goes up til 400 times leverage.
Now, if you use leverage into your account in a highly risky manner then you are clearly creating a big risk for your trade.
And if you try to use leverage in a more controlled manner, you are more likely to open better opportunity rather than opening a channel of trade losses.
That’s not all…
There are CFD brokers across the globe and the really good ones are regulated. In Australia, the Australian Securities and Investments Commission (ASIC) and the Financial Conduct Authority (FCA) set certain requirements and on the other hand, brokers need to comply to get the seal of approval.
Among the regulated brokerages that are licensed by these regulators are the following brokerages:
• Plus500
• Pepperstone
Singapore and other countries have their own too, so they can protect traders from brokers who have the intentions of scamming their clients.
Bottom line?
CFD is not a simple product you can access and make money easily. It is equally important to make use of leverage correctly to avoid big losses.
Try maximizing your account by not using highly leverage products and instead, maximize the use of your leveraging tool.
So if you think that trading CFD is a scam, try to rethink it over again. The only time you got scammed is by not joining a licensed and regulated CFD broker.
76.4% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
