The world of financial trading has come a long way in recent years, with new investment opportunities emerging as alternative investment options. In the Philippines, two popular investment options are CFD trading and traditional trading. While both options aim to generate profits for traders, there are fundamental differences in them.
CFD Trading
CFD trading is a type of financial instrument that allows traders to speculate on the price movements of underlying assets without owning the actual asset. Additionally, CFDs can trade a wide range of markets, including stocks, commodities, indices, and currencies. CFD trading is popular among traders as it offers high leverage, low capital requirements, and the ability to trade both long and short positions.
Traders have the potential to earn money through CFDs by taking advantage of both long and short positions
When entering a long position, traders aim to benefit from the upward price movement of an asset. Hence, they buy the CFD at a lower price and sell it at a higher price, earning the price difference as profit.
On the other hand, traders can also profit from falling prices through short positions. By taking a short position, traders sell a CFD contract before buying it back at a lower price.
Traditional Trading
Traditional Trading is about buying and selling physical assets in the hopes of profiting from price changes. It commonly includes stocks, bonds, and commodities. Typically, investors must have a significant amount of capital to invest, as they must purchase the actual asset for trading purposes.
In traditional trading, individuals can earn money by buying assets at a lower price and selling them at a higher price. This method involves purchasing physical assets such as stocks, bonds, commodities, or currencies.
Leverage
CFD trading offers higher leverage than traditional trading which allows trader to control a large amount of capital with a smaller investment. Thus, CFD trading in the Philippines offers the potential for higher profits with lesser risks.
Market Access
CFD trading provides traders with access to a wide range of markets, including stocks, commodities, indices, and currencies. In contrast, traditional trading is typically for a specific market or asset class.
Flexibility
CFD trading offers traders the flexibility to trade both long and short positions, making it possible to profit from rising and falling markets. Meanwhile, traditional trading is buying assets in the hope of selling them at a higher price.
Risk Management
CFD trading provides traders with the ability to use stop loss and take profit orders, which can help in risk management. Traditional trading, however, does not offer these risk management tools.
VT Markets Philippines CFD Trading
VT Markets is a popular broker for CFD trading in the Philippines. Our platform offers clients high leverage with a wide range of markets, including stocks, commodities, indices, and currencies. Additionally, we provide powerful trading tools to help you make better decisions and potentially profit from trades. Apart from these, we offer loyalty promotion which allows users to earn rebate points while trading with us.
Is CFD trading profitable?
Absolutely! Investors have the potential to earn substantial profits through CFD trading. However, it’s crucial to recognize that CFDs come with inherent risks, particularly due to their leveraged nature. Leverage enables traders to invest larger sums of money than they actually possess. It’s important to note that over 75% of retail trading accounts experience losses when trading CFDs. Therefore, it is important to approach CFD trading with a realistic mindset, understanding that it is not a get-rich-quick scheme.
Which is better for beginners? CFDs or Traditional Trading?
CFDs can be a better option for beginners due to accessibility, flexibility, and lower capital requirements.
Conclusion
Ultimately, CFD trading and traditional trading are both attractive options for traders in the Philippines. However, the choice between the two boils down to personal preferences and investment goals. Traders who are looking for higher leverage, lower capital requirements, and greater flexibility should consider CFD trading in the Philippines. On the other hand, those who prefer a more traditional approach may find traditional trading more suitable.
Regardless of the decision, it is important to conduct research and acquire a solid knowledge of the market.
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