When trading CFDs, investors choose an asset they believe will increase or decrease in value. They then enter into a contract with their broker, agreeing to exchange the difference in price of the asset from the time the contract is opened to when it is closed. If the price moves in the direction they predicted, they make a profit. Conversely, if the price moves against their prediction, they incur a loss. CFDs offer traders the ability to trade on margin, meaning they can open positions with only a fraction of the total trade value. This feature, known as flexible leverage, allows traders to amplify their potential returns. However, it's important to note that leverage also increases the risk of losses.
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