CFD trading platform in the Philippines
Although CFDs have been around for more than 20 years, they have only recently become popular. CFD or Contract For Difference is an agreement between two parties to exchange the difference in value between the opening and closing price of the contract when it closes.
In other words, a CFD is an ordinary agreement between a seller and a buyer to pay the difference between the price at the opening (buy) and the closing (sell) of the contract. The buy may be commodities, a stock index or shares, while the profit or loss depends on the price difference between the opening and closing price.
What are the trading platform capabilities for trading CFDs in the Philippines?
Essentially, CFDs are a leveraged product, which allows for higher profitability by providing a margin of 1 to 20% on the notional volume of such contracts for major equities. The beauty of leverage is that you can enter into transactions for amounts many times greater than the security deposit. This leads to a simple conclusion - it is possible to work with CFD even with small capital. This is why these contracts have become popular in internet trading.
It is a kind of buying on credit. You use the leverage, but for that you pay a percentage, which is deducted from your trading account. A sort of bank commission for using a credit card.
Considering that trading real shares to get rich quick is not something everyone can afford, trading on a CFD trading platform in the Philippines has been a definite breakthrough. Its emergence has broadened the market for those traders who are small in capitalization, but have the knowledge, experience, and skill to make money.
Pros and cons of the CFD platform.
When you work with a CFD trading platform you do not own the stock, you do not own the asset the stock is valued at. But you can receive income from price changes of this asset. This is what a CFD allows, which by its properties is a derivative function of a stock purchase operation.
The trader has an opportunity to buy and sell and get profit or loss due to price change of the asset. This type of trading has a qualitatively low cost and is quite convenient. Trading stocks carries a high risk as there is no possibility to hedge them.
On a CFD trading platform it is possible to hedge the risk. It is an insurance policy against adverse price movements in the market. The usual way to hedge is to enter into a multi-directional transaction in a homogeneous financial instrument. This is one of the positive features which distinguish stock trading from CFD trading.
Moreover, the advantage of working with such contracts may also include the possibility to work with a CFD platform anywhere in the world. The main thing is to have access to the Internet.
When you start trading on the CFD platform, you do not need to wait for the quotes from the stock exchange to arrive, all trading is done in real time, as a result, you can enter the market at the best price. On the platform, a trader can either buy or sell a CFD contract without having an underlying asset. Whereas in the stock market, in order to open a short position, the traded asset must be available.
By using a CFD platform in the Philippines, you are exempted from paying special taxes for being listed on the share register or for the actual delivery of the commodity and there are no stamp duty or additional fees for accessing the market. Also, the trader gets access to different markets and a wide range of trading instruments from well-known companies' stocks to stock indices and commodities (wheat, cocoa, soybeans, corn, etc.).
As for disadvantages, they all have some. The disadvantage of a CFD platform is speculation, i.e. the chances of making a profit and incurring a loss are almost equal.
To trader, to know the probable future development of price movements (price, trading volume and others), it is necessary to use indicators and charts of technical analysis. Each chart and indicator shows the price fluctuations of a single financial instrument.
No one can predict the market, but the interpretation of signals from a probabilistic point of view can give a positive effect. Before using an indicator or a chart, you should understand how they work and what the methodology of their calculation and reading is. Be persistent and you will succeed!
Price movements are shown using three types of charts: Linear (based on closing prices of the selected time frame), Candlestick charts (displaying extremums, opening and closing prices of the time frame) and Bar charts (providing the same market information as the Japanese candlestick chart, only with a different interpretation).
The indicator signal is an indication that there is likely to be increased market activity in this range, whether by beginners or professionals. Therefore increased attention should be paid to such ranges. Major types of indicators include the moving average, RSI indicator, MACD indicator, Bollinger lines, ADX indicator, etc.
The technical analysis tools of the best CFD trading platform in the Philippines are worth using, but it is essential to understand how they work and combine their readings with the rest of the market factors. Try it and you will surely succeed!
How to make money trading CFDs in the Philippines?
All efforts expended by a trader are aimed at correct and absolutely adequate forecasting of changes in the price of an analyzed asset at a certain period of time. The purpose of such actions, of course, is the desire to gain speculative profit, and dynamically increasing. This logic is the basic principle of trading in absolutely all markets, including the best CFD trading platform in the Philippines.
Changes in the price of an asset always take place in only two directions - either up or down. This specifics of the market system operation is based on the banal law of supply and demand. The balance of these two factors in certain time intervals, one way or another, affects the direction of the price movement.
There is a wide enough range of trading strategies to achieve a high quality of transactions, which determines the profitability and risk factors. The easiest strategies to trade on the CFD platform may be:
- Short (sell) - this strategy is the simplest system for trading CFDs among all others. The trader takes a "short position" by opening a deal to sell the asset at a certain price. In this case, the speculator earns a profit if in the next certain period of time the price of the trading instrument became lower than at the time of opening the transaction.
- Long (buy) - a tactic that technically performs the same operation as a short sell, only with the objective of increasing the price of the asset.
In general, there is no expiration date for either short or long position, but technically each such long position requires a monthly rollover and adequate money management:
- Pair trading - this approach consists of simultaneously buying CFDs on one asset while selling another, and these instruments must be close in psychology and in the nature of the movement. Simply put, with a loss on a position in one contact, you can make a profit on the second, due to the fact that the price movements of both assets may be different. The use of the calendar spread, when a speculator makes counter transactions for the same asset, but in different months, will be relevant.
- Hedging - in many cases, the CFD market is used by traders to hedge open market transactions. In such cases it is necessary to open an oppositely directed position which gives an opportunity to close a part of a deal or to cover it completely with an opposite position. Such trades are usually undertaken in situations of increased risk.
Should I choose a CFD trading platform? It is certain that trading CFDs is not a new, but very interesting financial instrument and its positive qualities are likely to be successful.
There are four main types of CFD trading that have been tested over time
Intraday trading (trades are concluded during a trading session and are also closed during the same trading session).
Position trading (a trader holds a position in securities for a long period of time, usually several months or years).
Scalping trade (a type of intraday speculative trading strategies based on opening a number of short-term transactions for the purpose of obtaining small profits (a few pips) that sum up to achieve the expected rate of return).
Swing trading (it is short-term trading where a trader takes profits from a short trend, moving in the direction of the price with market participants trying to capture most of the price move).
Trading CFDs on the platform is interesting for beginners and experienced traders alike. The basic strategies for trading CFDs in the Philippines give you the opportunity to make money on the price movements of assets with a small starting capital and no holding power. This experience will be very useful in your education and preparation for trading on the stock market.
How to start CFD trading in the Philippines?
As you can see, a CFD trading platform in the Philippines has many advantages compared to a stock exchange, so sometimes even professional traders use CFD trading as an alternative to the stock market.
A CFD Trader - is a person who trades assets through a platform, using contracts to exchange rate differences. The trading is done through a special platform available through brokers. The whole process takes place through a computer or other mobile devices.
When you decide to start trading on a CFD platform, the first thing you will need to do is register on the platform. You will need to provide your personal details and confirm the registration process. After this you will have access to a free demo account. On it, you will be able to get acquainted with the appearance of the charts, the system and the instruments. All the operations on it are done with virtual money only and the quotes and the trading process are identical to those on the real market.
To start trading you must fund your real account. Funding your account is easy. To do so, select one of the funding options offered by the system: by bank card or via one of the online payment systems. Depending on the chosen method of funding, the money will take from 5 minutes to 5 days to be received.
Do not gamble with the money you need to live or to pay your bills. This is the first step to a big failure. Be systematic and don't get carried away. Stick to the strategy and control the risk. Being a CFD trader in the Philippines is hard work but very rewarding. It requires time and a lot of patience. Only a good trading system can give you the confidence to do it!