1 Leverage with the CFDs

Contracts for Difference (CFDs) are distinguished by their leverage effect. This mechanism provides the opportunity to control a larger capital than the amount deposited, by only committing a small portion of your capital, referred to as coverage or margin.
In other words, only a small portion of the total value of your position needs to be immobilized.

Let's take the example of an Apple stock priced at €100. You decide to open a CFD position for 20 shares. To achieve a trade equivalent to €2000, in reality, you only need to immobilize €200. This is what is referred to as leverage.
And the gains don't come from the immobilization of the €200 but rather from the €2000.

This leverage mechanism, therefore, leads to an amplification of gains, but also potential losses, as they are calculated based on the total value of the position (€2000) rather than the immobilized amount (€200).

If you choose a leverage of 1:30 on your account, then your gains and losses will be multiplied by 30.

2 Sell and buy

When trading CFDs, you are not obligated to have taken a long position to sell. You can directly speculate on either an upward or downward movement. If you enter a buy position, you anticipate the market price rising, and if you enter a sell position, you anticipate the market price moving downward.

If you want to open a buy position on our platform, choose the pair you wish to trade and simply click on 'Buy.' And if you want to open a short position, then click on 'Sell.

3 The underlying market of CFDs

CFD trading precisely follows the prices of the underlying markets.

Imagine that you buy an actual stock; you physically own a small part of the company. However, this is not the case when you buy a CFD. In this instance, you simply own a contract (for difference) that is not directly tied to the company's stock (the underlying asset), even if the CFD price exactly reflects the company's stock price.

4 Contract size of a CFD

CFDs are traded through contracts, commonly referred to as "orders" or "positions." For each contract, you need to choose the number of lots to determine the size of your contract, known as the Volume. For instance, in Forex, the size of one lot represents 100,000 units of the base currency.

For example: If you open a position of 1 lot on the EUR/USD, then the traded volume is €100,000.

5 CFDs and their fees

Fees depend on each trading broker. Generally, brokers charge fees through spreads, commissions, and SWAP.

European Trade charges fees through spreads for Standard accounts and commissions for ECN accounts.

6 Why trade CFDs ?

CFD trading allows traders to take positions both long (buy) and short (sell) without the need to buy before selling. This is because, with CFDs, you do not own the underlying assets.

Traders have access to all financial markets.   Forex, Cryptos, les Shares, Index, les Energies, Precious Metals, ETF, and many other markets.

Especially, CFDs allow for the multiplication of gains, as explained above. But, be cautious, as gains also imply potential losses. Therefore, please pay careful attention to the choice of your leverage.