CFD is short for ‘Contract for Differences’. It refers to a contract to exchange the difference in asset value between the time the contract opens and closes.
To understand CFDs and how it works, it is best to start with traditional investment. If you wanted to invest in a company, you would need to buy shares at the current share price. If you wanted to invest in gold or oil, you would need to buy a bar of gold or a barrel of oil. To make a profit, you would have to wait for the price to increase and then sell the asset mentioned above at a higher price than your buying price.
CFD trading works similarly, in that you open a trade for an asset at a specific price and wait for the price to increase or decrease. You make a profit or loss, depending on the different. A crucial different than the traditional investment is that a CFD investor never owns the underlying asset, instead receives revenue based on the price difference of that asset.
Indicators take the raw data from a chart and display it differently using various Mathematical formulas to assist traders in making the right trading decision. There are different types of indicators ranging from trend indicators, momentum indicators and oscillators that help traders visualise or predict market conditions. In essence, some technical indicators are useful for trending markets, while others can be used for non-trending markets.
Margin trading is a method of trading assets using funds borrowed from a third party. Traders would need a margin account instead of a standard brokerage account. A margin account allows investors to buy more securities with larger capital than what they could typically buy. With borrowed money or leverage, the profits and losses are magnified. This type of trading can be used in stock, commodity and cryptocurrency markets and is immensely popular in markets that have low volatility like the global Forex market.