What is Trading?

Trading is the act of buying and selling financial instruments with the aim of making a profit, and involves speculating on the price movements of stocks, currencies, commodities, indices, and other assets. Trading typically involves leverage, meaning you can control large positions with a relatively small amount of capital. However, leverage can amplify your losses as well as your profits, meaning careful risk management is advisable.

Traders use a variety of strategies and tools to predict whether an asset's price will rise or fall. These can include fundamental factors such as macroeconomic drivers or technical influences such as key support and resistance levels.

Contracts for difference (CFDs) are a popular way of trading on the price of cryptocurrencies, stocks, indices, commodities, and forex without owning the underlying assets. Instead of buying the asset (as you would when investing), you trade on the rise or fall in its price – usually over a short period of time.

Essentially, a CFD is a contract between a trader and a counterparty (sometimes a broker, sometimes the market itself) to exchange the difference in value of an underlying security between the opening and closing of a position.

With CFDs, you can profit on a market by speculating on its price rising (known as going long) or on its price falling (known as going short). And because a CFD enables you to trade using just a fraction of your position's value – known as trading on margin or leveraged trading – you can open larger positions than your initial capital may otherwise allow.