Are there any benefits to trading a CFD over trading the underlying asset?
Yes, there are. CFDs give traders a lot of options that he or she would not otherwise have, allowing the trader to be flexible.
- CFDs are traded with leverage, allowing a trader to control a large market position while employing a smaller amount of capital than would be required to control an equivalent position in the underlying asset. Leverage can significantly increase both your gains and losses.
- With a CFD account, a trader has the ability to trade Forex, Stock Indices, Oil, Gold, and Silver all from the same account. To trade the underlying market itself, a trader usually needs to have different accounts, often denominated in several different currencies, and often at different brokers.