How do you trade on Markets com?

1. What is financial trading?

Financial trading involves the buying and selling of securities such as stocks, currencies, commodities, bonds, and even cryptocurrencies. Unlike traditional buy-and-hold investing, CFD trading can be as short-term as you like, with trades lasting anything from weeks to just a few seconds.

2. What is a CFD?

A CFD stands for Contract-for-Difference, which is a type of derivative. A CFD is a contract between a broker and trader to exchange the difference in value of the security between the start of the contract – when you open the position – and the end of the contract; when you close the position.

With CFDs, you do not need to own the underlying asset and enables you to profit whether an asset is rising or falling. Simply open a long (buy) or short (sell) position depending on whether you think the price of the underlying asset will rise or fall. CFD trading involves the use of leverage, enabling traders to open larger positions. However, it is important to note that this is a double-edged sword - magnifying the potential for both profits and losses.

3. Benefits of trading with leverage

Leverage enables traders to control larger positions with a smaller initial outlay. Essentially you put down a deposit with the broker, called margin, which is a fraction of the actual trade size. The more leverage you have, the bigger positions you can take, and the bigger your swings of profit and loss can be. Leverage magnifies losses as well as profits, so needs to be treated with caution.

4. What instruments can you trade?

A variety of assets are available for trading with CFDs. At Markets.com you can trade on shares, indices, ETFs, currencies, commodities, bonds, and cryptocurrencies. Currency trading, often referred to as forex or foreign exchange, trading is among the most popular ways to trade online. This can all be done using a single multi-asset platform with a single currency account.

5. How to minimize risk

Trading is inherently risky. markets can rise and fall and no one can predict the future with certainty. However, there are ways to mitigate risks. 

For instance, a sound risk management strategy starts by carefully analyzing the markets, applying position sizing that is appropriate to your financial situation (not staking too much on one trade), and using platform tools such as stop-loss orders and take-profit orders to minimize drawdowns and maximize potential profits.

6. Understand the psychology of trading

Emotions can affect our decisions, so it is important to learn how certain biases and feelings can impact our trading habits. Trading psychology refers to your ability to handle risks and deal with gains and losses in an appropriate manner. If you understand the risks and learn how to master trading psychology, you will have an easier time keeping your head and executing transactions strategically