Risk disclaimer: Your capital is at risk, please take this into account when trading.
Online Trading has been very popular now a days, seeing advertisements over social websites by online brokers flashing how to make money and friends at the office talking about their experiences of making $500.00 in just one trade over the whole day. Being curious, I tried reading a lot about trading, and then got interested, eventually. I have asked people online, based on reviews and experiences, about the factors to consider before opening an trading account. And one important factor they keep on mentioning, especially at most Plus500 Review is “The Best Online Broker and Trading Platform”.
Being a very diligent person and conducts research about things, I compared online brokers and their platforms. Where in this Plus500 Review I found Plus500 and my experience of it, which offers one of the BEST CFD Trading Platform there is. Trading CFD’s for Stocks, Forex, Bitcoins, and many more. But what makes me open an account with Plus500, is it’s authorised and regulated by the Financial Conduct Authority, which makes me feel at ease. Before, I try to imagine what it is like to trade, and the risk taker in me opened an account and then trade Oil Futures, Trading the Pound vs the Dollar, and many more at the comfort of my home.
If you want to know more about How to Open a Trading Account with Plus 500 then click here: Opening Trading Account Plus 500.
As I was looking for my broker then, I’ve been trying demo accounts and learning how to make money from it, and I don’t want my wife to scold me for losing money. In this Plus500 Review, we discover Plus500 special features, to my surprise Plus500 doesn’t charge any commisions and they have a very low spread. And there I realized that Plus500 has one of the Lowest Spread in the industry by comparing it with other service and platform providers. So I think that is a pretty good deal.
Having valued much of my savings and pay check, I see to it that I get the best value there is for my hard earned cash. I was also amazed on how low you can open an account with Plus500, where they don’t require big deposit, which favors me since I don’t want to lose most of my money in a single trade. By the way in this Plus500 Review the simplicity of financial transaction will be discussed. Trading with practice money was fun, but going in with real money really gave me a kick and thought me the most. I was able to use small cash to earn big profits. By the way, I am a very defensive investor. So, with Competitive Rates and Low Spread I get my profits at a high which is good for me, low cash investment for trade with a potential for higher returns.
As I was operating my platform, one important key that I really like about Plus500 is the simplicity of the trading platform. Here in Plus500 Review, the design is classic and it is easy to navigate. For me, the real deal here is the accessibility of the Stop Loss, Trailing Stop orders, Buy and Sell Limit Orders. It is important to me that it is easy to locate, especially when the market becomes volatile and I want to exit my trading position. Overall, it is very good to use, and I can seamlessly execute my trading plan plotting my risk management levels quickly.
As mentioned earlier in this Plus500 Review, what makes me open an account with Plus500, is it is authorised and regulated by the Financial Conduct Authority. It is important to me that it is regulated that this is not one of the practices where client’s money are being scammed.
Plus500 UK Ltd is authorised and regulated by the Financial Conduct Authority (FRN 509909). Plus500 CY LTD is authorised and regulated by the Cyprus Securities and Exchange Commission (License No. 250/14). Plus500AU Pty Ltd, AFSL #417727 issued by the Australian Securities and Investments Commission is authorized to issue these products to Australian residents. You do not own or have any right to the underlying assets. Please consider our Disclosure documents available on the Plus500 website.
Funding your account is very easy and simple. You can fund your account by using Visa, iDeal, and MasterCard credit cards that makes it more accessible and fast. By navigating to Plus500 cashier screen and then fill out credit card details. After, one can expect to begin trading immediately. It’s that simple.
In addition, funding through Moneybookers, which direct clients to go first to the Funds Management window of the trading platform, and then selecting Moneybookers Option. Further, enter Moneybookers e-mail address, and an information will appear where the Moneybooker transfer can be confirmed. Due to financial security, Plus500 adhere to banking transactions processed within three working days.
Deposits through bank, are good and easy way to finance your trading account. In this Plus500 Review we experience that process on deposits through wire transfer takes up to three banking days before credited to a live account. Clients will receive an email first from Plus500.com about the details for wiring funds to their account, that includes the minimum and maximum deposit allowed.
Withdrawals is also simple. Just go to your funds management and follow the instructions there. To test the withdrawal time. I withdrew my money from my Plus500 trading account to my Skrill account. As you can see in the screenshots below, it only took a few days.
As an authorised and regulated institution by the reputable Financial Conduct Authority, Plus500 UK Ltd. requires that traders and clients to present an official photo ID before being allowed to make a withdrawal. Identification Cards must be current passport, driver’s license, or other official document that validates identity. In this Plus500 Review the only thing that I had to do was scanning my documents and mail it to them. You can do this via e-mail or by uploading PDF, JPEG or Doc files with the upload function provided on Plus500.com trading platform. As part of the Plus500’s due diligence, files are to be reviewed within 24 hours.
The Plus500 Review helps Traders and Individuals aspiring to trade an insight in getting the Ideal Broker and Platform. If they focus on the technicalities, instruments, service, fees, and a lot more are also important to consider in choosing the broker and platform that best suits one’s condition. And there I realized that low cost spreads and no brokerage fees increases profitability. That is why I opened an account, and continuously patronizing Plus500 because of its great job.
What about you? Is Plus500 something for you? Click here to open a demo account and try it out for free.
Bitcoin $5000 valuation is coming!
Since my last post in January about the Bitcoin of how it would perform this year. I knew it was going to grow in value but to be honest I didn’t expect that it would grew in value this hard. At the moment of writing this blog, Bitcoin is currently traded at 2395 USD.
So what has happend? Since the legalisation of Japan on Bitcoin and having more countries taking a interest in Bitcoin. The volume of demand for Bitcoin have increased rapidly. Like madness. Here take a look at these graphs.
This year there was a major growth in merchants that accepted Bitcoins as payment. Now why would they do that? For me it obvious that more and more customers are wanting to pay their products/ services in Bitcoin or any other crypto currency. Japan for example is going to have more then 260.000 stores that are going to accept Bitcoins and Ethereum as payment this summer. The whole bitcoin fever is huge! South Korea, Russia, Thailand are all currently looking if they are going to legalize bitcoins or not.
So why is it so huge? Why are people using bitcoins instead of the old cash? People are using bitcoins for a lot of different reasons. We think that the number one reason that people are using Bitcoin or are investing in Bitcoin, is that they are fed up with politics and central banks for manipulating the currencies to their disadvantages.
Like for example in Europe. The ECB is doing their best to make the European economy better. With the tools they are using it has some side effect. One of the effect is a low interest rate. Some banks are struggling to make a decent profit. So they lower their cost by firing people and decrease the interest rate. Which means that people are getting less interest on their savings account.
For some people the interest rate that they used to receive for saving their money on the bank went negative. Which means that for every pound that you are saving. You will have to pay the bank to have your money at their bank.
Kinda weird though since most of these banks were saved by your tax money. The ECB is not the only one. Almost all central banks around the world are trying to boost their countries economy. With the side effect of making things more expensive for the normal people while their money becomes less valuable. And the richer became richer and richer. It’s not fair right? To get justice for the normal hard working citizens, Bitcoin was brought to life. The same applies for other crypto currencies.
While more people are using Bitcoins to pay. The mainstream public are not using Bitcoins to pay right now at the moment. Because they don’t know what the real value of Bitcoin is.( Because all what the mainstream media does is informing how insane it is that Bitcoin and other crypto currencies became so much worth!). But we think that in time the mainstream public will slowly get to know about what the real value of crypto currencies are. We think that the majority that are using Bitcoins right now are merchants. Why? Because with Bitcoins merchants can get more advantages if they play it smart. Because with Bitcoins you don’t need anyone to make a transaction. So this means that the merchants doesn’t to have pay a transaction fee to the banks or to any other middleman. This way it will save them money.
And another thing is that merchants have to worry less about the value of the other currencies if they are doing business international. Both parties can just agree upon a fixed Bitcoin price. So you don’t have to worry about that your profit might decrease because the GBP has become too expensive or too cheap in comparison with other currencies.
With huge growth of start up companies that are active in the crypto currency world. Mainly in Bitcoin and Ethereum, it will be just a matter of time before the mainstream public will start to use Bitcoins and other crypto currencies types. On the short term there are countries like Russia, South Korea, Thailand, Australian, who are planning or looking into legalizing Bitcoin. And with gold rush that big investors and investment funds are having for crypto currencies, we think that there is a good chance that Bitcoin $5000 USD value will happen this year.
Opening and closing a trade is simple in Plus500. A trader with a Plus500 account can trade CFDs on Forex, Stocks, Commodities , Options and Indices.
Below I will explain to you how to do this and what the options mean that you see during opening a position.
In the screenshot above you must have noticed two options: short and buy. For the people who know a bit more about trading, simply put this is the same as going bear and bull. Whereas short is the same as going bear and buy is the same as going bull.
For the people who don’t know what I’m talking about:
Going short means you anticipate that the stock will go down. Let’s say you short a stock at £20 and tomorrow the stock value becomes £15. You will have made a profit of £5.
Buying a stock means you anticipate the exact opposite. You think the stock is going well, so the stock will increase. Let’s say you buy a stock at £20 and tomorrow the stock value becomes £25. Your profit is £5.
Of course these are just examples, if you are using Plus500 you’ll also get leverage and your profit (or loss) will most likely be a lot more.
When you click on an instrument in Plus500 you will be displayed a screen with information about that instrument. Let’s take Apple for example again. Look at the screenshot below. I clicked on Apple and information about that stock is displayed on the right now. Plus500 gives a couple of important information here, which I will explain in detail below.
The first thing you see is the title: Apple (AAPL) this is the stock you selected. Between the brackets the stock symbol is shown. This is the stock acronym that is used worldwide to identify that stock. Sometimes a stock name can be a lot a like, looking for that stock with the unique symbol makes it a lot easier to find that stock.
Next you’ll see pricing information of this stock. The current high and low values are shown here. This is taken right out of the Yahoo! Finance page. You can also see how much the price has changed in percentage in comparison with the opening value of that day. When the stock market is closed, you’ll see the line ‘Trading is closed’.
The line ‘Traded at the Nasdaq Yahoo! Finance’ just tells you where the stock belongs and where you can find it on Yahoo! Finance. Nasdaq the second-largest American stock exchange, usually consists of a lot of technical companies.
Next there are two buttons available. Short and buy and below this the value of the stock that you will short or buy. You see a little difference here. This is called the spread, the spread is what you pay to the broker as a commission. This usually is not a lot, depending on the stock’s popularity and value. Be careful with this, because to profit you need to make more money than you pay in the spread. When opening a stock I suggest you to try it in demo mode, to see how much the spread is exactly.
In the last section there is some more information available. If you don’t see it, click on ‘Info’ to uncollapse this information. I will explain to you the most important information:
Leverage: this is not the same everywhere. Sometimes it is 1:10, but the maximum leverage is 1:30. Leverage is a way to make your money worth more than it is. Let’s say you want to use £100. A leverage of 1:10 means your £100 is worth £100 * 10 = £1000. This means with only £100, you can buy stocks that is worth a £1000. Yes, this means you can make 10 times more profit, but this also means you could lose 10 times faster. This last thing sounds scary, but Plus500 gives us a negative balance protection. This means you cannot lose more than your deposit. This means that if you deposited £100, you can profit from £1 to £99999 (infinite) and only lose a maximum of your deposit £100! In my opinion this is awesome.
Premium: If you keep a position open overnight, a night premium is added or substracted from your position. This means you pay a small amount of money overnight (or you gain it). This is very low usually, so I don’t pay much attention to it. As you can see Apple’s overnight buy premium is -0.0093% of your position.
Premium time: This is the time that the premium is done. I almost always keep my position open for a night and I have never really noticed premium much.
Maintenance margin: This is important information, because if your position goes below this margin your position will be automatically closed. So to keep your positon open, your current account balance needs to exceed this margin. Thankfully, this isn’t much either. I usually deposit £100 and use that £100 completely in a position and this position can be kept overnight without it autoclosing on me. If you open a position, this margin will also be automatically calculated for you in the top header (look for M. Margin) – so you don’t even have to calculate this yourself.
Expires daily/expiry date: I have never noticed this much. I don’t think this applies to stock, but might apply to something else. Just make sure to check if this is ‘No’.
Trading hours: This is important to know. Plus500 automatically changes this time to your timezone. An American stock is usually open from 9.30 am to 4 pm American time, but the time shown here is in your own time. Which is great and makes it so much easier to time your trades well.
Now you understand the information screen. The next screen to explain is the screen when you want to open a position.
Now let’s say you want to buy Apple. Click on the Buy button. This is what you will see now:
The short screen has the same information, so I will explain this only once.
The Plus500 short and buy screen is very nicely done with the user in mind. It gives great information and makes it easy to open a trade. The first thing you see is the stock name and symbol. The current value and the percentage of movement since the opening time.
Now to open a position you need to decide how many shares you want to buy. Let’s say here youw ant to buy 5 shares. The value of this 522 dollar, which is the same as 488,59 euro. Plus500 automatically takes the foreign exchange price of your currency and the one the stock is using, which usually are dollars. This is great, you don’t really have to pay much attention to this. Also, because Plus500 is giving you leverage of 1:10 of this stock, you only need 55 dollar to buy 5 shares that is valued 522 dollar. Amazing right?
So really you only need to pay attention to the ‘Required Margin’. This is the amount that will be substracted from your account to use in the position. So not the value, but the required margin. This is important.
Next you have ‘Close at profit’ and ‘Close at loss’. These options give you the ability to let Plus500 automatically close your position when the stock value reaches a certain value that you set. This is great if you don’t have the time to close it yourself and want to let it happen. Also, if you are losing this guarantees a certain loss. So instead of losing your whole position, you only lose what you want. Or the opposite: profit what you want.
Guaranteed stop sets an absolute limit on your potential loss. The position will be closed at the value you specified, even if the market gaps suddenly, your position will be closed at the value you specified.
The advanced section I will explain in a later article.
Below this section, the information I explained earlier is displayed again for your convenience.
When you are ready, just click on the big blue button ‘Buy’ and your position will be opened. This position will be shown in the left menu at ‘Open positions’. Or in the stock list, under the stock itself.
Don’t forget, to truly learn how to trade, you need to try it yourself for a couple of times to be able to get the hang of it. Try it out with small amounts of real money first to feel how you react to profits or losses. This is important to know of yourself prior to trading.
Go back to:
The topics below are coming soon:
This section covers the following topics while using the Plus500 software. We will start with how to open and verify your Plus500 account using the software, scroll down to view the steps. If you’ve already done this, feel free to skip to the next topics.
The topics below are coming soon:
Software download link: www.plus500.com.
Downloading and installing the Plus500 software is easy. Just follow these steps.
Congratulations! You can now start trading with real money using the software.
Go back to:
You have chosen to use the webtrader as your main platform for trading with Plus500. You can always switch and use another platform later, as your account is kept cross-platform. Below are the topics that we will cover while using the webtrader.
The topics below are coming soon:
First of all, I will explain how to open an account using the webtrader.
Go back to:
Plus500 is an online broker with an easy accessible platform, where you can trade CFD stocks / shares, Forex, Indices, Commodities, ETFs and also Options. The Plus500 trading platform is a powerful CFD trading tool that let’s you trade the world’s most popular financial instruments at just one place. You can open an account in just 5 minutes. So let’s get started with this Plus500 tutorial.
The topics below are coming soon in the Plus500 tutorial:
The topics below are also part of the plus500 tutorial:
Mobile app (coming soon)
Plus500 is in my opinion one of the easiest and most reliable platforms that you can trade with and I have tested a lot of online brokers. In this article I will explain to you in detail on how to open an account in Plus500 and also on how to use it. Read our Plus500 review about them to see more reasons.
This tutorial is divided into three sections. Each section covers one of the Plus500 platforms:
Each section consists of the topics that were stated above. The steps are similar, but the buttons and areas to click could be on a different spot, so the screenshot per section will be different.
So the first question is important, how do I open an account in Plus500? Thankfully, opening an account is easy, but there are a couple of steps that you have to take.
First of all, decide on how you want to trade.
The topics below are coming soon in the Plus500 tutorial series:
The topics below are coming soon in the Plus500 tutorial:
Mobile app (coming soon)
Find out here on how to make money with CFD Trading : Make money on simple way with CFD Trading
Have you ever experienced a situation, with your Forex Broker, where a surprise news headline went public and you went in because you saw an trading opportunity and made a position, but after a few minutes the market went reverse? You were suppose to put stop loss on that earlier position, but it was just a quick entry for a quick buck and you now having problem because the order for a stop loss or trailing stop doesn’t count in? Or have you ever experienced that you needed more information and set of new eyes to see the market clearer when everything is not coming into place, especially, after a few straight losses?
A few months ago I opened an account with InstaForex, I heard a lot of good comments about this Forex Broker so I decided to try trading at this broker. Since I’ve been experiencing a couple of Trade Slippage, and was trading at variable spread that eliminated my positions immediately in a good opportunistic scenario, when the price fluctuates widely. As Jordan Belfort said in the movie the Wolf of Wall Street; “My clients don’t judge me by my winners, but they judge me by my losers”. And surely, before I change to Instaforex, I was losing badly. Hence, there are bulls and bears I’d rather be profitable.
It is important for me that the Forex Broker has a clear system for trading, rules and policies regarding the withdrawal and deposit of funds. After all, if a fund, even if it’s the smallest amount we want to withdraw, and if takes a lot of time then we doubt and complain. Depositing money, as well as Withdrawing money comes in easy and very accessible forms as my Forex Broker, Instaforex, has so many tools for funds transfer, didn’t thought that they would do a better job at first but they did. Starting with withdrawals there’s a standard time for these important transactions to be handled and what I like about this is the fast response of the Customer Service group that makes me feel that my money is safe. They respond to me through email, and courteously discuss with me the situation and procedure.
There’s an array of banking payment system for depositing and withdrawing funds. But what I like most amongst this is my first trial of the Forex Broker’s innovation, InstaWallet. There you can share and save your funds with fellow traders, in this case my friends. Like any other broker this Forex Broker have the same transactions in terms of deposit. Now, I was able to withdraw funds through Skrill which has no fee associated and is processed just within 24 hours.
I was impressed by the great credential and how InstaForex managed their operations in their early years. While I was conducting my background research I was able to see numerous of prestigious award that the company was recognized for, no wonder InstaForex became the Asia’s Best Broker. It was Asia’s Best Broker in 2009,2010, and 2011 by World Finance Awards, speaking of a grand slam championship right there for 3 consecutive years; Best Retail Broker in 2011 by European CEO Awards and Jordan Expo, and 2012 by IAIR Awards to name a few. Looking for a Forex Broker, it is important to note the successes that they’ve achieved as this is a proof that they mean business and that they’re doing very well in their field that’s why they are being recognized. And I just didn’t stop there, I researched why and what things did they do to deserve such recognition.
As I was checking other news feed, their great platform and other great offers, what made me realize that InstaForex as a Forex Broker have done a great job is their history of making great deals. They’ve secured a contract with MetaQuotes Software Corp., whose business is providing quality online trading software. They’ve negotiated and entered into quality contracts with the largest news provider (Reuters and others) to perform good analytics and real time information which is very important to all traders, and importantly, reached an agreement with major contractors to have access in the foreign exchange market, speaking of high liquidity. These moves were the fundamental building block that creates and maintains high-grade service regardless of market condition.
And as a great Forex Broker, they continue to ride this momentum and better their services with cutting edge technology to consistently provide higher than the standard performance. To which they have pioneered and co-branded the InstaForex Bancard, where traders and investors can transfer money from their trading accounts to VISA cards/InstaForex Bancard. Such an innovation makes the process more effective and efficient that paved way to the creation of other great systems like PAMM accounts, Forex Copy and many more.
Changing Forex Broker makes it difficult to change that established habit, but as I shift to Instaforex I was able to trade immediately, since the platform they use is similar to the one I’ve been using, MetaTrader 4. Hence, no time wasted for major adjustments. As a newbie to an intermediate trader like me, it is a good sign if the Forex Broker provides educational setups and other new ways to develop learnings. On their website I saw many icons leading to videos and blogs about trading, and through this I am aware and exposing myself into seasoned market experts that sharpens my instincts for high probable trades. Also, this new unique system called InstaCopy where I, or anyone, can copy the proven and winning trade patterns of the most successful traders in the field has proven a good training for me as I replicate other’s winning positions.
Winning and Losing trades vary from trader to trader. There are traders winning in bulls and there are traders winning in bears, but to me these are all paper gains until I close my position which becomes profit. My Forex Broker, now, adheres to what I seek as a trader. If I didn’t take the risk of changing, then I just continued my growing headache further, and now I’m slowly becoming a winner again.
Transparency is important when it comes to investing your money. When you are depositing your money into an online brokers account that could be scary, because the risk of losing it is present. This article is to show you what our reviewed online brokers do with your money. By making this process transparent, you should find it a lot less scary to invest your money.
Before investing any of your money you should always follow a couple of simple rules. Ask yourself these questions:
We have researched Plus500 before opening our own accounts here and to answer the above questions about Plus500.
Yes, Plus500 is an online broker that is authorised and regulated by the Cyprus Securities and Exchange Commission (Licence No. 250/14). They are also regulated by the Financial Conduct Authority (FRN 509909).
And yes, they also comply with its regulatory requirements. Below I’ll explain what makes it safe to use Plus500.
One of the regulatory requirements that is directly connected to us as the users is client money protection. This means that your money is protected, literally. When you open an account with Plus500 your funds will be held in accordance with the Cyprus Securities and Exchange Commission’s client funds rules. Under these rules, Plus500 pays each client’s funds into a segregated client bank account. This means the money you deposit goes into a separate bank account. They do not use your money to do anything for themselves.
Furthermore, Plus500 is debt free, has substantial liquidity and significant surplus regulatory capital reserves over its regulatory requirements. This means, because of having more than 1 million clients worldwide that carry out millions of transactions per month, they have enough reserved money to protect yours.
Another thing worth mentioning is that you cannot lose more money than you deposited, as Plus500 is one of the few CFD online brokers that offer negative balance protection. This means you do not owe the broker money in case your account has a negative balance (goes below zero). It could happen that a trade moves so fast that the money you used to open the account isn’t enough. With negative balance protection Plus500 automatically closes your position when it goes below zero, which is called margin call. This way you cannot lose more than you deposited. I think this is extremely important to know as there are many online brokers out there that doesn’t have it.
Withdrawing money is easy. There are just a couple of steps that need to be done. You have to upload a couple of identification documents first. This is to ensure no money laundering (fraud) and to be sure that the money you deposit goes into the right person’s bank account, so nobody can steal from you if for example by any chance they’ve hacked your account. This means you can only withdraw your deposited money to a bank account using the same name as your identification document.
These are the documents that you need to upload:
Withdrawing money does not cost anything and usually takes up to 3-5 workdays, which isn’t long at all. My personal experience is that my withdraw shows up within 3 days if I use the wire transfer method.
As for depositing money with Plus500, it’s also easy. The following methods are accepted:
After using one of your favorite forms of payments, it is displayed in your account immediately and you can use it immediately. If you don’t want to use the money you deposited anymore. No problem! You can just withdraw it again anytime, without any additional costs.
Please also check out our other tips on how to recognize a good CFD broker.
These few reasons is why we have chosen Plus500 as our favorite online broker, because it’s safe and we are not scared of depositing our money in their platform. We trust them. Also, we are already making a small extra income every month by using it.
If you have any trouble, please let us know and we will try and contact them for you to solve your problem. Got any other questions? Please feel free to comment below this article.
In this third part of the online CFD course we are going to explain what the CFD trading cost are. The first part was all about what a CFD is and what the advantages were from using CFD. The second part of the online CFD course was about how you could make money with CFD trading. If you want to read part one and part two then click on the two links below.
Before you are placing a CFD there some CFD trading cost that you should consider. At most CFD Brokers you will have to pay a commission fee, spread cost and a holding cost (if you are holding a CFD position longer then one day). However at Plus500, they only charge you the spread cost and a holding cost ( if you are the CFD buyer and if you are the CFD Seller you would receive a interest).
CFD trading cost of commission
When a CFD broker charge you a commission for each trade it will always consist out of the part. The first part of the commission is the minimum fixed commission price which is usually between 7 -9 pounds. And the second part of the commission consist a percentage of a trading value. So basically the higher the transaction trading value is the more commission you pay. Luckily there are some brokers such as Plus500 and Markets.com that doesn’t charge these kinds of commission. If you want to know more about these two brokers then you can check them at our brokers review.
When you are buying and selling CFDs immediately, the spread amounts to the difference between what you paid and what you receive. If you sell share-based CFDs, you will receive interest. So basically when you begin CFD trading you will notice that the transaction fees is always related to your trade. A part of the CFD trading cost is called a spread cost which is the difference between the bid/buy price and ask/selling price.
Let’s say you want to trade in forex and that the spread is 2 pip. So which this means is that you transaction fee is 0,0002 cent per traded unit. If you are trading GBP/EURO with 100 pounds and a leverage of 1:200, your transaction fee will be ( 100 x 200 x 0,0002)= just 4 pounds.
Unlike trading options CFD’s doesn’t have a expiration date. You can hold most of your CFD’s position overnight, weeks or months. However when you hold a position overnight you will be charged interest. This interest is really small but you get charged for it because when you hold a CFD position overnight it will be seen as an investment that has been made with borrowed money. So in this case your broker(lender) have to charge you a little interest.
Let’s say you want to buy Starbucks CFD shares at a price of 50 pound a share with a transaction value of 10.000 pounds and you have a leverage of 1:20. With this leverage of 1:20 you will have to use only 500 pounds of your money instead of 10.000 pounds instantly. And you will hold this position for 10 days and sell those at 60 pounds per share.
So what would be your profit after deducting the CFD trading cost?
Initial trading value was £10.000,- which equals 200 Starbucks CFD shares.
Final trading value (after you have sold your position) is (£60,-x 200 Starbucks CFD shares)= £12.000,-
CFD trading cost = spread opening + spread closing + overnight cost.
spread opening cost= £20,-
spread closing cost= £20,-
overnight cost= the interest rate at most brokers is usually the Libore interest + 2,5%. Let say that the libor in this case was 2,5%. So the total interest rate for a overnight position in total is 5%. The overnight cost will be £10.000 (transaction value) x 5% (interest per night)/365 days= £1,36
The total overnight cost for holding it for ten nights will be £1,36 x 10= £13,69
In this case your net profit will be £12.000 – £10.000 -£ 20 -£20 -£13,69 = £1.946,31
So your return on the investment on CFD trading with only £500 pounds is nearly 400%!
Now your CFD trading cost could be more if the broker also charged you a commission on each transaction that you have made. Fortunately there are a few brokers that don’t charge commissions. One of them is Plus500. If you have any questions regarding this topic, please post them in the comment section below and we will answer it as soon as possible.
Read more about CFD Trading: How to make money with CFD Trading