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บทเรียน 7 Advantages and Disadvantages of Broker
In this topic, we will analyze the advantages and disadvantages of CFD trading, help you understand the essentials of investing, and consider the appropriate trading format for you.
Advantages and Disadvantages of CFD Brokers.
Advantages:
- The low transaction costs
CFD trading has low entrance fees for investment deposits and extra fees for trading holding positions, making it easily accessible.
- Very high liquidity
In trading CFDs, asset prices are referenced directly from the market, making them highly liquid. Traders can access the best prices from the liquidity of this underlying market.
- Market Accession
CFD brokers have connections with financial markets and other assets, which help traders make other markets easily accessible and quickly; thus, brokers also have extensive networks, enabling traders to access a wide range of products.
- A wide range of products can be found on one platform
CFDs Broker offers all major products available on global markets, thus allowing traders to invest in trading assets available in markets worldwide. It is accessible 24 hours a day.
- Easy, convenient, and fast trading
CFDs are direct trading between traders and brokers. They allow traders to access asset trading tracking easily and without waiting for the status because they have an automatic trading system; moreover, they are convenient to make transactions.
- CFD brokers offer a wide selection of options
Therefore, there is relatively high competition. This has a positive effect on traders, who can get low fees and great innovation.
- Providing convenient investment tools
CFDs Broker has an easy-to-use trading platform and offers features such as copy trade, robot trade, and AI to help traders trade comfortably.
- No stamp duty is charged
Assets available in the form of CFDs are financial products that are derived from an underlying asset. The trader does not own the asset, so stamp duty is not charged.
- Trade assets from uptrend and downtrend
Traders can trade assets to speculate on the rise and fall of asset prices, or you can choose to invest from both Buy/Sell.
- Using leverage
Leverage allows traders to invest a small amount of money and acquire a larger number of units. The trader's amount is invested as collateral to trade assets and gain a position in holding more assets.
Disadvantages:
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Risk of Fraud
Due to the emergence of many new CFD brokers, some of which are untrustworthy, it is essential to choose a regulated broker, such as one with a license.
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Fees
When investing with a CFD broker, traders must pay the broker fees for services such as spreads and overnight fees.
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Not suitable for long-term investment
Investment with a CFD broker is unsuitable for long-term investment because CFD trading does not give traders their underlying asset.
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Risk of leverage
CFDs often use leverage to increase the power of holding assets and allow traders to take larger positions. Therefore, traders have a higher risk of losing more than the amount of money they have in their account if they use CFDs without understanding.
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Lack of regulation
CFD trading is not a strictly regulated investment platform. The reliability of CFD brokers is not determined by government status or liquidity but by reputation, age, and financial stability. Therefore, it is essential to research a broker's history before creating an account.
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Volatility from liquidity
CFD trading is highly volatile in the market, thus impacting the assets. For example, asset prices may fluctuate more than traders expected, or spreads may widen, affecting the price and increasing losses.
A comparison table between CFDs and stocks provides traders with a clear understanding.
Properties |
CFDs |
Stocks |
Ownership |
No |
Yes |
Leverage |
Yes |
No |
Range of market |
Multiple markets |
Stocks and ETF |
Costs |
Spread & Rollover |
Commission |
Trading hours |
24/5 (some assets) |
During the stock exchange opening |
Dividends |
Yes, via a cash adjustment |
Yes |
Losses |
Losses are capped at the amount invested |
Losses are capped at the amount invested |
Voting right |
No |
Yes |
Liquidity |
High |
Lower than CFD |
Warning:
CFD trading is highly risky, and your investment may be completely lost. Please research the information and risks before deciding to invest.