CFDs & ETFs Trading
What are CFDs
CFD stands for Contract For Difference. This type of financial instrument allows you to benefit from the fluctuations in the price of stocks, commodities, indices and more, without really purchasing them; i.e. you can profit from the difference between the opening price and the closing price of a certain position opened on a certain CFD instrument. It is important to us to emphasize that you don’t own the asset you trade. FMarkets was one of the first online brokers to offer CFD trading, giving individual traders access to a large range of markets which were not accessible to them before.
Why Trade with FMarkets
- Trade with confidence– FMarkets is an internationally regulated broker.
- Large variety of CFD instruments– Trade commodities, indices, ETFs, stocks and bonds.
- Powerful Platforms– Manage your trades manual or use our automated trading.
- Leveraged Trading– Up to 400:1 leverage on various CFDs.
- Master your trading skills– Expand your horizons by entering our educational materials & daily updates.
- Best in class customer service– 24/5 multi-lingual live support with a dedicated account manager.
What is CFD Trading?
CFD trading is quite similar to forex trading. When trading on the platform, you select the instrument you wish to trade and enter your order. Just like in other trades, if you think the price of a certain instrument, e.g. crude oil, will increase, you’ll want to buy the crude oil CFD. The same goes the other way – if you predict the value will go down you sell the CFD.
Naturally, like any type of trade or investment, wrong predictions can lead to loss of money, and one should be aware of the risks involved in CFD trading. There is plenty more to learn about the trading of CFDs, and you can learn more by browsing through the education section, in which you can watch video tutorials, read articles, get news updates, check out our glossary and more. Some more information on CFDs and their advantages can be found here.
How to trade CFDs with FMarkets
FMarkets presents to its clients various trading platforms, for manual as well as automated trading. Providing different features and tools, our clients can find a platform which is the most convenient for each of them to use. We also offer the option of opening a demo-account, so you can practise trading on those platforms before you start trading with your own money.
Leverage offered by brokers allows you to open positions larger than what your actual capital allows. At FMarkets we offer up to 200:1 leverage on various CFD instruments, which means you need only 0.5% or your position size in order to open the trade.
For instance, if you wish to trade crude oil, buying 20 barrels at the price of $44 USD per barrel, then your position size will be $880 USD. However, due to the 100:1 leverage offered by FMarkets on crude oil, you will need only 1% of your position size in order to hold this position, i.e. $8.8 USD.
Leveraged trading can magnify trader’s profits. However, at the same time one should take into account that losses can be magnified as well.
How Much Will it Cost to Trade CFDs
FMarkets offers attractive trading fees, charging only the spread of the opened positions. Spread is the difference between the sell and buy prices of a certain instrument. When calculating a cost for a position, you need to multiply the spread by the size of the position. This is the spread charged for the position. For example, if the spread for crude oil is $0.03 USD, the cost for opening a 10 barrel-position is $0.03 X 10 barrels = $0.3 USD.
Most of the CFD instruments are traded on floating spreads, which means that the spreads are affected by the liquidity of the market. The more liquidity the narrower the spread will get (Only 3 instruments have fixed spreads at all times: gold, silver and crude oil).
You can review the offered leverage and spreads for all CFD instruments on our Spreads & Swaps page on the website.
CFD Contract Rollover
Each CFD is based on a contract defining its rates, charges, etc. Each of these contracts has a maturity date, which is the date that the contract expires and automatically replaced by a new contract. In order not to disturb traders during market hours, the contract rollover takes place over the weekend.
For more information, you are welcome to visit our CFD Rollover page.
Start Trading CFDs with FMarkets
If you think you know which way the market will go and want to start trading – it’s time to join FMarkets and enjoy the best CFD trading experience! Open an account now to enjoy yours, or try our risk-free demo account
What are ETFs
ETFs, or Exchange Traded Funds, are a type of investment fund that tracks indices, bonds, commodities and other instruments, combined in a basket of assets. ETFs are traded on an exchange, and their value shifts during the day, due to buying and selling actions done by the traders.
Why Trade ETFs with FMarketst
- Trade with confidence– FMarketst is an internationally regulated broker.
- Large variety of instruments– Choose from a variety of instruments to trade with CFDs.
- Competitive Spreads– Starting at just 0.8 pips.
- Leverage– Get leverage of up to 20:1 on your trades.
- Short trading available– Benefit also when the market goes down.
- Master your trading skills– High quality educational materials & daily market analysis.
- Best in class costumer service– 24/5 multi-lingual live support.
What is ETF Trading
An ETF is a collection of assets put together, to permit traders to trade in a few markets simultaneously. The baskets are usually combined together with a common characteristic such as energy instruments, agriculture instruments and others. If you wish to trade a stock, commodity and bonds all together you can simply trade in the ETF market.
Some ETFs track the performance of a specific nation’s equity market. Examples are the MSCI Brazil Index Fund, MSCI South Korea Index Fund and others. ETFs also make it possible to invest in certain industry sectors. Examples offered by FMarkets are the Dow-Jones U.S. Real Estate Index Fund and the Energy Select Sector SPDR. It is important to know that all ETFs are traded as CFDs.
ETFs are traded as a basket of assets – stocks, commodities and more, put together per sector. If you speculate that the energy market, for instance, will go up, you can invest in a few trades simultaneously. A prominent advantage of ETFs is that often they balance each other out; if one instrument’s value goes down, another instrument’s value can go up and even it out. If the price of crude oil goes down, as part of the energy basket, a stock of the same basket might even it out.
How to Trade ETFs with FMarketst
Since ETFs play on the range of markets, you’ll need a broker that offers trading in all those markets with good conditions. ETFs require knowing the markets well enough to determine when to enter it and when to exit, and to know how each instrument will affect the other. Saxo Market is aware of the ETFs’ special nature and helps you stay on top of the market, to use the price changes to your favour.
FMarketst offers a range of more than 25 popular ETFs to trade as CFDs, giving traders the ability to trade long or short with leverage of up to 20:1.
When you wish to start trading, you can choose from a vast selection of trading platforms. Two of them are built for manual trading, whilst others are for traders who prefer their trades to be done automatically. Thanks to that variety each of our clients can find the platform that is most convenient for him to trade on. Opening a demo account before trading is a recommended option, so you can practice trading on those platforms before doing so in the real market.
One of the most common tools used by traders is Leverage, whose purpose is to enable the trader to open positions larger than his account’s equity. FMarketst offers you up to 20:1 leverage when trading ETFs, which is the equivalent of 5% of a position’s value required in order to open it. Leverage is a common tool used worldwide, and we offer the best conditions for it
We will give an example; if you want to trade a certain ETF basket that is valued at $2,500, a rather large amount of money. Using leverage, however, will require using only 5% of the position, which means you’ll only have to use $125 of your account.
Using Leverage makes trading easier and can increase a trader’s profits. However, one should always bear in mind that losses can be magnified on the same scale.
How Much Will it Cost to Trade ETFs
You can read more about the benefits for our clients on the Spreads & Swaps page.
Educational tools available
When trading any instrument, especially one as complex as ETFs, you need to keep yourself updated and informed at all time. Naturally FMarketst caters clients with education and product knowledge, and we recommend using our video tutorials, glossary and other educational tools. Let us guide you all the way, and get exposed to learning materials and market reviews that are essential for trading.
Start Trading ETFs with FMarketst
If you enjoy working on several markets simultaneously, challenging yourself into making rational investments and trading on one of the most prestigious markets in the world – trading Exchange Traded Funds is exactly for you!