The World Bank market capitalization of listed domestic companies (current US$) data states that the trend for the sum of global stock market’s capitalization fell short by $70 trillion in the past few months of 2018. Two years after this data was revealed, business news articles have proven that more people turned to day trading as an avenue to ease their boredom and to earn money of course. As they trade, they have options to carry out their transactions into several platforms such as Stocks and CFD trading. By looking at our statistics, it is a fact that several day traders have found their comfort zones via Stock Trading but the number of traders who utilize CFDs in the market is remarkably increasing .You are probably wondering what made them change their course along the way. Well, you no longer need to think hard because we shall now unfold the reasons behind this big switch in the market.
The Market Scenario
The health crisis that we are facing at the moment has brought several challenges to us. Millions of business establishments and companies decided to close their business to protect themselves from bankruptcy. Consequently, millions of people all around the world were stocked at home and lost their jobs.Such moment provided an opportunity for day trading platforms to advertise their products. When we search the internet, day trading articles are found everywhere. Trading websites boast interesting features that help obtain a promising profit but financial coaches say that high profit also requires having big capital to start the deal. This is the sad part, not all people have enough funds to support their trading journey because we are currently facing a pandemic. Did this discourage people to become traders in the comfort of their homes? “No” it didn’t. The Pandemic never stopped people from shifting their interest to the world of trading because the internet offers several platforms that enable people to trade well despite risks. This is where the comparison and contrast between CFD trading and Stocks Trading comes in.
Why do we limit our discussion between CFD Market and Stock Market only?
This is because among the several trading platforms, CFDs and stocks are related to each other. Ideally, CFD deals are similar to Stock Market deals minus the privilege of owning business shares. Such CFDs are called CFD Stocks.
Why do people pick CFDs over Stocks to trade with?
Leverage and shorting are the most common CFD features which entice traders to pick CFDs over Stocks. CFD Leverage allows the trader to merely set a margin in order to gain access to a particular asset. Such a feature appeals to the trader because this gives them the ability to purchase other CFDs in another platform. Due to the erratic movement of market rates, traders find Shorting as another reason why CFDs won their approval. Shorting happens when a trader aims for a gain during an expected drop in market rates. The main goal of a shorting transaction is to buy at a low rate and sell the commodity at a higher rate.
Tips for current traders who wish to do the big switch
● Look for platforms that offer competitive rates between stocks and CFDs
● Make sure that you have an access on a variety of stocks including promising markets
● Enhance your portfolio through exposure to other CFD platforms such as stocks, indices, forex, commodities, options and bonds
● Scrutinize your trading platform, make sure that it can be trusted
● Since CFDs enable you to trade 24/7, it also pays when your platform has 24/7 customer service to help you with your queries.