CFDs, or contracts for difference, are a type of derivative product that allows investors to speculate on the price movements of various assets. Several brokers offer CFDs in Singapore, including IG and Saxo Bank.
There are two ways to trade CFDs
You can go short or long. Going short is when you bet that the price of an asset will fall while going long means that you are betting that the price of an asset will rise.
If you think the price of a particular asset will increase, you will buy a CFD contract for that asset. If the asset price rises, you make a profit; if the price falls, you lose money.
In this article, we’ll look at what it means to go long with CFDs in Singapore and how to get started trading CFDs.
What is a CFD?
A contract for difference, also known as a CFD, is a type of derivative product that allows buyers/investors to speculate on the price movements of various assets. Several brokers offer CFDs in Singapore, including IG and Saxo Bank.
What does it mean to go long with CFDs in Singapore?
In Singapore, when you go long with CFDs, you buy a CFD contract and expect the underlying asset price to rise. It means that you are taking a long position on the asset.
You are not buying the underlying asset when you buy a CFD contract. You instead are entering into a contract with your broker to exchange the price difference between when you enter and exit the trade.
It means that you can profit if the asset price rises, and you can also lose money if the price falls.
How to start trading CFDs
To start trading CFDs, you will need to open an account with a broker that offers CFDs (Saxo CFD broker).
Once you have opened an account with a broker, you will need to deposit some funds. You can use the money to buy CFD contracts of various assets.
When you are ready to trade, you will need to decide whether you want to go short or long on the asset.
The pros and cons of going long with CFDs
The pros of going long with CFDs include the potential to make a profit if the asset price rises. Additionally, CFDs are a leveraged product, which means you can trade with a smaller initial investment. It can allow you to take advantage of price movements that you may not be able to take advantage of if you were using cash.
The cons of going long with CFDs include the potential to lose money if the price falls. Additionally, CFDs are a leveraged product and can lead to significant losses if misused. It is important to only trade with money you can afford to lose.
So, should you go long with CFDs in Singapore?
The answer depends on your circumstances and risk appetite. If you are comfortable with the risks involved and have some trading experience, CFDs can be a profitable way to trade the markets. If you are new to trading or not comfortable with high-risk investments, CFDs may not be a suitable investment. Remember to do research before investing and never risk more money than you can afford to lose.
We have looked at what it means to go long with CFDs in Singapore in this article and the pros and cons. Trading CFDs can be a great way to make profits if you correctly predict price movements, but it is essential to remember that there is also the potential to lose money. Always trade with caution and only use the money you can afford to lose.