Before you begin trading, it is essential to understand the concept of CFDs. Like conventional trading, if you think a market is set to rise you ‘buy’ at the top end of our quote (the offer price), or if you think the market will fall you ‘sell’ at the bottom of our quote (the bid price).
Unlike conventional trading however, your position is a contract - you never actually own or have any interest in the underlying asset.
The size of the trade which you place through our trading platform is entirely your choice, providing you meet the minimum size for that market. In you are trading share CFDs, you need to specify the number of shares your wish to buy or sell, however if you are trading indices or commodities for example, you need to specify the number of contracts.
How it works
When placing a trade on our PureDeal platform, you will essentially follow these steps:
Quick Guide to Trading CFDs
Select your market, for example
Australia 200 Cash, AUD/USD or Daily US Light Crude.
Quick Guide to Trading CFDs
Decide whether you think the market will rise or fall
Buy at the upper end of our quote if you feel the market will rise,
sell at the lower end of our quote if you believe the market will fall.
Quick Guide to Trading CFDs
Monitor trade: You may close your position at any point before the expiry time (for applicable contracts) to bank your profits or cut your losses.
Quick Guide to Trading CFDs
Your trade closes either when it reaches its designated expiry, or when
you choose to close it before that time. When you actively close your
position, you perform the opposite action to when you opened the trade,
i.e. if you chose to buy originally, then you would sell at the lower end
of our quote at that time to close your position, and vice versa.
This a simplified summary of how to trade CFDs, and there are other factors to consider, such as taking measures to help place a cap on any potential loss you could make as well as initial and variation margin requirements.
Next steps
- See our examples of how CFD Trading works in practice.
- Discover more about our award-winning trading platform, PureDeal.
- Find out more about CFD trading risks and how to manage them.
- Read our market analysis to become informed about CFD and forex markets.
- If you're ready to start trading, you can open an account online in minutes.