CFD: Can you avoid risks? Margin call and margin

Worldwide trade in CFDs has gained considerable popularity in recent years. Trading in regular securities according to clear competition. This applies, however, not only to the profits to be Social Trading achieved, but also to the amount of losses. Especially newcomers in CFD trading often underestimate the risk and lose much more than their use. Experience in CFD trading shows that even security options such as stop loss or trail stops do not protect traders from bottomless losses.

The experience of the trader as well as the offer of the online broker are parameters that can make the CFD trading safer. Because: The smaller broker the spreads put, the lower is the profits, however, the loss risk decreases 24option as well. In order to gain a better insight into the relationship between profit and risk, the following example will help. Also included in the example is the stop loss option. This is an unlimited, immediate sale of orders when a value defined at the start of trading is reached.

Example: anyoption A trader decides to go to the DAX-CFD long on Thursday. The DAX-CFD has a current market value of EUR 10,000 at an 8,000-point index level. An initial margin of 2% is charged by the online broker. For the trader, this means a margin of 200 euros.

At 7920 points, the trader now uses a stop loss option at the expense of the maintenance margin of the online broker in the amount of 0.50%. If the 7880-point mark falls below the trading volume, the close-out Copy Trading level is reached. In this case, the long position is terminated and the trade is concluded.

Following the example, a stable DAX is used. The closeout level is not reached for the time being, because the DAX remains at 8000 points. Due to the stable price, the trader remains in his trade decision and goes to the weekend with an open long position.

Further scenario: Over the weekend, there is a crisis with a global impact. Economic experts react and assess the consequences of the etoro crisis with the world’s economies, their growth and trade relations. The crisis leaves its mark: On Monday the DAX starts with 7200 points in the week.

With the extremely high losses in CFD trading, the CFD trade received a difficult image, which led to a decline in new registrations. plus500 Online brokers responded and introduced security systems, such as the exclusion of negative account balances.

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In the case of the broker’s choice it is therefore important to compare according to the applicable security systems. Not all brokers offer the exclusion of negative accounts. This is the broker’s takeover of because click here for more info the trader’s debts. Negative trading accounts are compensated by the broker.

Another effective security measure is the guaranteed stop loss orders. Stop loss options are carried out independently of closed stock exchanges. Online brokers that offer guaranteed stop loss options equal the actual actual loss incurred by themselves. Typical for brokers with a guaranteed stop loss option is that additional charges are charged for the still-selectable stop loss option.

In principle, however, every CFD trader must be aware of the constant risk of IQ Option trading with CFDs.

Image: Pixabay

An article from IID.de

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