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CFDs Stock Contracts: Chance to Make Big Profits

Earn on Microsoft stock growth? Or on the fall in Boeing securities? Why not? Especially since the brokerage company offers its clients a choice of shares of nearly 70 leading world companies.

Financiers will remember this year 2024 with unprecedented ups and downs in the stock, commodity, and foreign exchange markets. Stock indices and stocks were losing up to half of their value in a matter of hours, and then were soaring to the skies just as rapidly. And then they were falling again… The reasons are clear, and the main one is the coronavirus pandemic.

Such frenzied volatility can only scare Investors who have invested their capital in securities with the expectation of a stable profit. However, traders engaged in active trading are happy with it as it allows them to make a lot of money.

You May Read: What is Leverage in Trading?

It is not That Difficult to Become a Trader 

Now let us see how it works. Let us say you open an account and become a client of the same company. It’s quite simple and can be done online in a couple of minutes. Then your download a trading terminal to your computer or smartphone – the program with which you can make transactions. And… Congratulations, you are a trader now!

Please note that you will not need large initial capital to earn on stock transactions. A clear advantage of the account, which is called Stocks, is the absence of a minimum deposit. 

The minimum transaction volume is 1 share. And, for example, if Inc.’s current stock value is $3100, which is a large enough amount, then Coca-Cola’s stock price is only $62, Twitter’s – $34 and Hewlett Packard’s stock price is even less, about $17. So, even with $100 or $200, you can form a good investment portfolio.

Especially since you will have a huge selection of securities – shares of almost 70 world-famous brands, including Apple, Ferrari, IBM, Visa, Google, JP Morgan Chase, Ford Motor Company, Mastercard, McDonald’s, Microsoft, Twitter, UBER, eBay, Alibaba, Netflix, Deutsche Bank, and many others. In addition, ready-made “portfolios” such as stock indices will be at your service – Dow Jones, Standard & Poor’s 500, DAX 30, Nikkei 225, etc.

CFD-Contract: Make Money on the Growth of Shares and on Their Fall

At the same time, it is not at all necessary for the shares themselves to physically pass into your possession since in times of crisis this can create difficulties in selling them. Thanks to the CFD system, you will profit from fluctuating stock prices in any conditions – both when their price rises, and when – this is especially important! – it falls.

CFD contract (Eng. Contract For Difference, CFD) is an agreement between a trader and a broker on the transfer of the difference between the value of an asset (share) at the time of opening a trading position and its value at the time of closing a position. And it is only you who decides when you open it and close it. And this is your great advantage.

For example, you opened a position to buy 1 share of Tesla Motors at a price of $175 on October 25, 2021, and closed it on October 29 at a price of $200, earning it $25. And ten days later, on November 08, when shares of Tesla Motors began to fall, you open a reverse position, for the sale, which you closed on November 09.

During that time, the price drops from $200 to $180 and, if you physically owned this share, you would have lost $20. But, since you correctly predicted the price movement and opened a position for sale, then, according to the CFD contract, you win and receive this amount from the broker.

Thus, although the difference in the value of Tesla Motors shares was only $5 (changed from $175 to $180) from October 25 to November 09, you, due to volatility, earn as much as $45!

The main thing is to open a position at the right time and in the right direction and close it in time. Fundamental and technical analysis will help you in this.

Leverage is a Way to Increase Your Profit 5 Times

And here it is a must to mention another very important aspect, which will help the trader, that is, you, to increase your profit many times. This is leverage, that is, a loan that a broker will provide you automatically, instantly, and without any collateral.

Leverage in NordFX is 1:5, that is, the broker will increase the amount on your account by 5 times. And, returning to the example with Tesla Motors shares, you can buy not one, but as many as 5 shares of this company and your profit will no longer be $45, but $225, that is, your starting capital will grow by 130% in less than half a month.  

Of course, the situation given in the example is ideal, but it cannot be called unreal, fantastic either. Experienced traders can achieve significantly better results. Moreover, in addition to the trading instruments described above, stocks and stock indices, there are many others in the trader’s arsenal.

These are gold and silver, oil, a wide variety of currencies (dollar, euro, British pound, Japanese yen, and many others), and cryptocurrencies, including the most popular: bitcoin and Ethereum. And the leverage for transactions with currencies reaches not 1:5, or not even 1:100, but 1:1000.

That is, having an amount of 1,000 USD, you will be able to make transactions in the volume of 1 million dollars, which provides truly unique opportunities for making a profit even with very small start-up capital.

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