The success rates of many financial trading instruments have been very low. New products come in limelight occasionally and they turn into success occasionally. For example trading options started way back in 70s but now they have became the choice of traders, fund managers, hedgers and others as a global business. Recently many new trading instruments came in limelight and it includes instruments like ETFs, binary options, spread bets and others. But only a few have the capacity to become more successful at online CFD trading i.e. contract for difference.
Online CFD trading is popular in Europe and Australia and will flourish as they are introduced in other parts of the world.The day is not so far when the global market for CFDs can rival the trading volumes of cash markets of underlying instruments on which they are based.
History of Online CFD trading
Trading CFD originated in the late 80’s which started as a response to a demand from the institutional traders and hedge funds. They wanted to short stocks without the need to undergo the costly process of borrowing stock first. Smith New Court, a firm listed in securities list in London stock exchange receives the credit of creating the first CFD contracts.
Large investment institutions started to offer CFDs as over the stock (OTC) products for the institutional traders who were able to take the advantage of tax exemption and a benefit of hedging their portfolios. Now the CFD market is growing rapidly due to increase in the global market volatility and better instruments of trade. In the late 1990s the retail investors also become interested in CFD trading while the institutional investors continued enjoying online trading CFD. GNI,( Gerard and National Intercommodities) was the institution which started providing retail investors an opportunity to trade CFDs on stocks through its new and innovative electronic trading system. Now a number of institutions from UK and other European countries have joined the CFD marketplace and its popularity is growing constantly.
Advantages of trading online
CFD trading online at https://www.xtrade.com/ provides numerous advantages to the traders dealing in CFDs and let us have a look on the main advantages.
- You get valuable tax benefits when you trade with CFDs. For example they are exempted from government stamp duty of 0.5 percent which is levied on regular stock trading.
- CFDs deal with a big range on underlying instruments and the trader can take the advantage of trading in multiple markets from a single account. CFD trading covers almost all of the major financial market and thus CFD traders can take the advantage of trading with the underlying assets from these markets.
- Those who have the good knowledge of various financial markets of the world can take the advantage of all of them through trading them with CFDs
With leverage in CFD trading, a trader at can trade on high trade volumes even with a low amount of capital as a margin.