Monday, June 24, 2024

Is CFD Trading on the Rise?

CFD trading is one of the most popular methods of trading and diversifying investment portfolios, that some believe is growing in popularity. It can be easy and accessible for amateur traders while also a good way for existing experts to broaden their investments. CFD trading is now a common offering by many brokers and there are various factors which can be attributed to helping it rise to this position.

Increasing Fintech Start-ups

London has been creeping up on Silicon Valley for a while now to become one of the world’s leading tech cities. It has seen the number of fintech start-ups in the city grow at a rapid rate over the past five or ten years, to the point where it is now valued as a £20 billion industry and home to plenty of successful and growing start-ups.

These start-ups cover all sorts of financial areas, but many have been set up to aide CFD trading. Whether it’s developing apps to allow people to make CFD trades from their smartphones or technology used within trading strategies, the popularity of this trading has provided many opportunities for fintech start-ups.

Advantages of CFD Trading

The advantages of CFD trading are a clear reason why this trading method has grown. Some advantages include:

  • Go short or long: Meaning you can profit from rising and falling markets
  • Trade across markets: CFD trading can be done on many markets, from forex and stock indices to commodities and more
  • No stamp duty: Never actually owning the asset means there’s no stamp duty to pay
  • Leverage: CFD trades can be entered with funds that only represent a fraction of the total value, meaning you can make potential high gains (though the same is true for losses)
  • Diversification: It provides an easy way to diversify any trading portfolio

The Economy’s Effect

There has been plenty of uncertainty surrounding the UK’s economy in recent months and years, especially with Brexit and the general election. These factors and plenty of unpredictability have made CFD trading more appealing, especially due to its ability to trade on falling markets. The likes of the pound dropping in value and stocks being greatly affected by Brexit, for example, offered plenty of opportunities to trade on markets which fell.

This all points towards CFD trading being a far more popular method of trading and investing than previously seen, which only looks likely to rise as technology advances as well.

Elliot is the Editor at ABCMoney. He manages a team that writes and contributes to many leading publications across a number of industries.

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