Trading Principles
CFD Trading
CFDs are an effective form of trading stocks, indices, commodities and currencies. In principle, a CFD (contract for difference) is a contract (agreement) defined as an agreement to exchange the difference between the opening and closing price of a financial instrument of the underlying asset being traded – a stock, index, commodity online.
Forex Trading
The principle of the Forex exchange is to convert one currency into another. What happens if you buy a EUR/USD currency contract on the Forex exchange? By holding your currency, e.g. EUR, you are essentially deciding not to hold the currencies of other countries, e.g. USD.
How does CFD Trading work?
CFDs, or Contracts for Difference, were developed to give clients all the benefits of owning shares without having to physically own them. For example, instead of buying 1,000 Microsoft shares from a stockbroker, a client buys 10 lots of Microsoft on the Goldstar trading platform. A $5 increase in the stock price will result in a $5,000 profit for the client, just as if they had bought real shares traded on the stock exchange.
The main difference is that there are no exchange fees and many other unnecessary things associated with trading stocks directly on the stock exchange are eliminated. GCI Market Maker can therefore offer zero fees and very attractive margin requirements. CFDs have grown dramatically in popularity in recent years and we believe that they will gradually become an increasingly popular method of trading in the financial markets.
The main advantage of trading CFDs is that the client can trade on margin. CFD trading means that clients can trade a large portfolio of stocks, indices or commodities without committing a large amount of capital. Using the example above, a client who purchases a CFD on stocks worth 50,000 USD would pay a margin of only 2,500 USD. For currencies and commodities, the current margin on the Goldstarway platform is 25 Euro or USD per 1 lot.
In the case of stocks, CFD investors benefit from current market movements. Clients open positions in real time, which are evaluated with each market movement. Profits or losses are added to or deducted from the account in real time.
How does Forex Trading work?
The main mechanism of Forex is that the dollar competes with four base currencies: the Japanese Yen, the Swiss Franc, the Euro and the British Pound. In addition to the main currencies, there are about 25-30 other currencies traded on Forex with varying degrees of correlation to world currencies. Trading on foreign exchange (Forex) exchanges is usually done on the basis of margin trading. At the same time, a relatively small deposit is required to open much larger positions on the market.
To trade, you need two currencies (crosses), where you will be in a long position (buy) in one and short (sell) in the other. Currency trading is based on the principle of price movements. You can open long and short positions (i.e. you buy or sell your base currency). When you close a position, the opposite trade is made. The profit or loss appears in the difference between the amount at which the currency was valued and withdrawn in these two transactions. Your broker automatically converts your profits or losses into your base currency (usually USD).
Forex and Gold and Silver
Forex and Gold and Silver. Trading currencies, or gold, silver and other instruments on the Forex platform, has created a new era for profitable speculation. Private investors and individual traders entered the global currency market when they discovered the advantages of trading on the Forex exchange:
- Trading leverage
- 24-hour market liquidity
- Low trading costs
- Dynamic movement and profit opportunities