eToro's trading platform offers a great avenue to familiarize yourself into the concept of CFD trading. Built with customized interface that is user-friendly and innovative features, eToro makes life easier for any traders wanting to dive deep into learning the in's and out of CFD trading.
Offering a variety of options to traders that would have not been possible using traditional investing methods, eToro is a multi-asset broker that also offers trading opportunities for stocks, cryptocurrencies, currency pairs aside from CFDs.
If you're already interested to trade CFDs with eToro and wondering where to begin, then the very first step is to open an account. To make things easier, you just need to click the button below.
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
In finance, CFD means "contracts for differences", an agreement on a futures contract where the differences in the value from buying and selling of a financial instrument, is made through monetary payments as opposed to the delivery of securities or physical goods.
Simply put: CFD involves a trading engaging in a contract with a CFD broker, instead of buying an underlying asset directly.
CFDs assures that even in small investments, there is a possibility of achieving yields equal to the underlying asset or market.
Remember: If you are a trader only looking to simply trade shares of invest your money on an index fund, CFDs may become too complex for you. However, if you want to apply advanced investing strategies such as using leverage trading and short-selling, then you might want to learn more about CFD trading.
Trading via CFD gives traders greater exposure while using lesser capital. It also provides traders the opportunity to capitalize on market movements and the ability to trade a wide variety of markets and assets.
The last decade has seen traders opting to trade via CFDs when trading stocks, commodities, indices and currencies because of the flexibility it brings as compared to the more complex world of traditional trading. CFD trading also paves better access to leveraged trading, foreign markets, short selling and fractional shares.
But wait, what are fractional shares?
Fractional shares are part or a fraction of a share. With CFD, you don't have to buy the whole value of a financial instrument. Instead you can buy a literal share of a stock.
If Apple's stock is valued at $1,000, on eToro you can opt to invest a $50 Apple stock with 1:10 leverage, making you hold a stock of Apple valued at $500, which amounts to half of the total share of Apple in your portfolio.
The assets a trader can trade through CFD in eToro are currencies, stocks, indices, cryptocurrencies and commodities. On the asset's trading page or window, you will see a "CFD" label for the Buy or Sell position.
For assets that only allow CFD trading for Sell positions, you should be able to see a "CFD Trade" label on the asset's Sell trading window.
In most countries, CFD trading is allowed except for the United States and Hong Kong. Due to SEC regulations in the United States stating that it goes against US securities law, CFD trading is not available for US traders.
Therefore, users of eToro residing in the United States or those accounts under eToro USA are not allowed to do CFD trading.
Traders can in fact speculate on several financial instruments in the market. However, while CFD trading is almost similar to futures and options market, there are some differences such as:
Yes. Since eToro follows the regulations set by tier-1 financial regulators such as the CySEC, ASIC, FinCen and FCA, the funds of eToro users are safely secured at leading and trusted banks while any personal information is protected under an SSL certificate.
Remember: eToro offers CFD trading in several countries such as the United Kingdom, France, Australia, Spain, Italy, Germany but not in the United States and Hong Kong due to existing conflict with current financial securities law.
CFD trading also comes with its own set of risk, otherwise everyone would have gotten rich because of CFD trading. The challenge to having a successful strategy in CFD trading is to understand its various complexities and to also have a wide knowledge about the financial market.
In CFD trading, traders can lose more than they originally invested. Because of the use of leverage, CFD trading is seen as riskier than traditional trading.
In CFD trading, traders are required only with a small amount of trade value, normally 5%. If the trade heads to a favorable direction, traders will then earn 100% profit. However, if the trade goes the other way, traders can potentially lose 100% of the total trade value.
Now that you have all the information you need about contracts for difference or CFDs and understand how it works, you're most likely interested about trading with eToro and wondering where to begin.
Here's the deal: Your very first step is by opening an account so to make things easier, all you have to do is click the button below to get started.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Past performance is not an indication of future results.
Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework.
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.