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Alex Jones

Understanding The Concept of Leverage

CFDs enables traders to speculate on rises and falls in commodities, currencies, and other financial assets while only investing a fraction of their capital. The traders are leveraging off the money they have, in the hope of making more. With CFDs, investors just have to risk a fraction of the market value of the underlying asset when making a trade, sometimes as little as 1%. The remaining 99% of the value of the position covered by the CFD provider.
Even though you the traders put up 1% of the value, they are exposed to the same gains or losses as if you had paid 100%. The actual percentage of the market value that they will be asked to put in will vary for different
CFD providers, and for various underlying assets.
This fact can make CFDs seem very attractive. Even if traders don’t have the equity to buy the underlying asset itself, you they share in potential gains and losses on the value of that asset.
However because they are trading with leverage, the gains and losses are magnified—and the risks are much higher. Traders might end up losing much more than they put in.
Our Blog will help you to choose the most suitable trades.

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