Learn about CFDs
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Learn about CFDs

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Description

What assets are available as CFDs on eToro? What’s the minimum trade size? What’s the difference between going long, short, leverage, stop loss and take profit? Step in the CFD universe.

Transcript

So you want to take your first steps in the world of CFDs. 

In the last video, we learned about what makes CFDs popular.

Now let’s find out how to actually start trading them on eToro.

You know how much you want to invest, but you’re wondering what can actually be traded as CFDs.

The answer is: everything.

In fact, some asset types are only available on eToro as CFDs, such as traditional currencies, commodities, indices and some ETFs.

The rest can be either underlying assets or CFD.

Investor’s choice.

Once you’ve chosen what to invest in, you’ll want to know the minimum trade size.

Every asset type has its own, and you can find all the values on our website.

Found it? Good.

Now it’s finally time to open a CFD position.

When you open a new position you’ll need to choose your direction, either buy or sell.

Buy when you believe the value of the asset will increase.

Sell or short when you believe its value will decrease.

Next, decide on the dollar value you wish to invest, and simply fill in the amount, or enter the number of units you wish to purchase.

Then. choose whether you want to use leverage, and how much.

Leverage enables you to multiply your buying power by choosing a larger exposure to the market with a smaller amount of invested capital.

It could be highly profitable, but it’s also quite risky, so make sure to keep that in mind.

The leverage available depends on the limits imposed by regulation, which vary according to the volatility of each underlying asset.

You can find all the information in our help center.

Onwards to Stop Loss, which is an instruction to automatically close your position if it reaches a specific loss.

The minimum mandatory Stop Loss on eToro is 50% by regulation.

However, you can choose to extend it beyond 50% if you’d like to.

It’s important to know that in some cases, for instance in a highly volatile market, you can lose more than your set Stop Loss.

Next is the Take Profit, which is an automatic order to close your position after reaching a certain profit to make sure you don’t lose it, should the asset suddenly change direction.

And, lastly, what rhymes with bees but unlike them is in no danger of extinction?

That’s right, fees.

Look at the bottom of your trade box to find out what your positions weekend and overnight fees are going to be.

That’s it!

Just a few clicks and you’ve got your very own CFD.

Thanks for watching and see you on eToro.