CFDs, also known as Contract for Difference, are financial instruments that allow speculation on assets without holding them directly, whether stocks, indices or commodities. We then say that CFDs allow you to trade underlying assets. CFDs are less well known than the stock market or forex although they have solid arguments that should interest many traders. These are products that have the characteristic of being very simplified in terms of their use and will thus easily suit beginner traders.
First of all, the advantage of being able to trade on CFDs is indisputably their practicality. With a single account, you have the possibility of trading an impressive range of assets, from currencies to indices, including gold and even American equities. In the same vein, take a look at the article on investing in the stock market through trackers. It might interest you.
In addition, the costs surrounding CFDs are at a much lower level than what can be practiced for example on the stock market. There are no custody fees or brokerage fees, just the spread with which the broker is remunerated.
CFDs also offer simplified trade management, which can make life much easier for beginners who keep a trading journal. For example, it is possible to trade a European index at €1 per point. This splitting is not authorized on all types of markets such as for example on the Futures market where it does not exist.
Finding a CFD broker, as in any market, should be a thoughtful process that should not be taken lightly. Indeed, the CFD sector is not spared by sleazy brokers, so you should not register on the first broker you will find on the internet. Know that it is strongly advised to do a mini market study of several brokers that would potentially interest you and then compare them to each other and especially find out about their reputation on the web. Apparently very serious brokers can turn out to be very bad choices after consulting the opinions of Internet users. This is why it is better to see the choice of a broker as an investment in its own right to be able to trade with a partner you trust.