Soteris Phoraris of easyMarkets
Yes, its Valentine’s Day and there are many different types of love – the love between a person and their car, the love between two people and the love you will have for CFDs after you read this article!
Why am I so confident about this fledging romance, like a financial markets cupid? Let’s find out.
Up? Down? Who cares?!
CFDs are financial products that follow the price of an asset. The good thing is that it allows you to follow it both when it’s going up and when it’s going down.
It’s understandable that most people forget that they can still have a positive outcome even when the markets are dropping with CFD’s. I mean the media doesn’t help, here are some recent market headlines courtesy of Bloomberg and Reuters:
“U.S. Stock Rally Falters as Yen Leads Haven Gains: Markets Wrap”
“Volatility Doesn’t Come Without Economic Consequences”
“Global Stock Recovery Falters”
They don’t really inspire you to say, “let’s go to the markets!” but the thing is that every movement, positive and negative, can be used with CFDs.
You can “short” CFD’s which essentially means you expect the asset to drop or continue dropping. This also known as selling a CFD. “Buying” the CFD mean you expect it to increase in price from the point you purchased the asset.
With a CFD you can sell high and the exit low, which will work just like the infamous adage, buying low and selling high. Ignore the jargon – in both scenarios that’s what you want.
Love is in the air
And that is why CFD’s deserve your affections. Stop look affectionately and all starry eyed at Bitcoin’s crazy bull run, its less attractive sibling Bitcoin’s downtrend can be just as appealing.
With the right kind of strategy, going short can be immensely satisfying. So, feel free to open a bottle of wine, put your favorite sweat-suit on and go short on your favorite instrument. It might be non-traditional but what can we say, love works in mysterious ways!
And so do the markets, so remember no matter what type of trading strategy you choose, always protect yourself, with the risk management tools available such as stop loss and price notifications.
Just another little piece of advice, although volatile markets are seductive, they remain well… volatile meaning they could turn on you at any minute. This Valentine’s Day remember to trade like you love – responsibly.