FAQ: RANGE CFDs
This section is intended to answer the most common questions about Range CFDs.
What are Range CFDs?
Range CFDs are a contract for difference financial derivative product that allow investors to invest in the movement of Commodities, Indices and Foreign Exchange rates (FOREX) (underlying assets) and supersets of such underlying assets (Sentiments and Indicies). Collectively, these are called Assets.
What are Range CFDs used for?
Range CFDs are used by investors to trade on the expected asset price movements. Typically, the investor may take the view that the market price expectations differ from the investor’s view of the market, and the investor may trade based on such expectation differences.
Why trade Range CFDs?
- Investors reportedly trade Range CFDs because they wish to complement advanced and complicated FOREX with a simpler trading experience.
- Investors report that they like to know their maximum exposure is at any point in time, and know what the maximum return is that current trades may yield.
- There is no need to calculate the worst case outcome of current trades, or to be concerned with stop-outs that may ruin an otherwise promising trading position.
- The maximum return and maximum exposure are known at all times.
How do Range CFDs differ from MT4/5 trading and other products?
Range CFDs provide a clear graphical user interface with explicit maximum returns and potential losses. Investors have reported that they do not need to take part in educational courses to trade – the parameters are transparent and clear. Returns can be any value up to a maximum yield, which is clearly set out at the time of investment and during the period prior to expiry.
Who trades Range CFDs?
The typical trader is interested in balancing risk and potential reward for each Asset. Upon making an investment, the investor typically watches the performance of the trade, often making complementary trades to hedge risk and change the risk/reward balance.
Tips and tricks
- Calm investments that do not shoot for quick miracles tend to be more successful than high investments in maximum return CFDs.
- Successful traders have reported risk reduction and loss limitation as being key to their success.
- Some traders have been successful when predicting changing volatilities in manners that differ from general market expectations.
When are Range CFDs a good way to trade?
Traders that wish to concentrate on the market, not the tools used to address the market, report that they like to use Range CFDs as their method to trade. The simplicity of the user interface enables the investor to focus on the market, instead of concentrating on the operation of the trading tool itself.
- If an investor wishes to make a simple trade on a single asset, Range CFDs provide a method by which such trades can be placed very conveniently.
- If the investor has a clear view of the market, and wants to configure an own derivative by making several trades that complement each other, Range CFDs are an efficient way of placing those trades.
- The investor can use a combination of investments in multiple assets to address an expected complex market condition – all inside a simple user interface.