Best CFD trading platform Ireland

Last updated: 14.09.2022
Howard Friend
Author:
Howard Friend
Adviser
CFD & Trading
Experience
> 10 years

Contracts for difference or CFDs are a flexible option to conventional buying of stocks. The trader deals in CFD to trade numerous financial instruments, over-the-counter like shares, currencies, commodities and indices.

Trading CFDs means that you can trade a stock as a derivative without taking delivery of the actual stock. A derivative is a contract traded where the value is derived from the price of the stock rather than the stock itself. It is a contract between a buyer and a seller paying the difference between opening and closing the trade.

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  • Why trade CFDs?
  • The power of leverage
  • Margin
  • Risk management is crucial
  • The key to protecting your capital
  • A trading plan is essential
  • Conclusion

Why trade CFDs?

Trading CFDs using our CFD trading platform online, gives you the flexibility to profit from the asset traded two ways. Firstly, opening the trade, depending whether a market moves up, known as a long position. Secondly, if a market moves down, shorting the position. The CFD trader speculates on the price movement of the asset in future. The payment received on closing the trade depends on whether your forecast is correct. This means that a “sell” transaction will be made and once the asset price has fallen to the price speculated, a “buy” transaction will be entered into and profit will be received.

Profits from winning trades or losses from losing trades are settled through the trader’s CFD brokerage account. The higher the price between the buy price and the sell price, the higher your profits, however should the share price fall in the opposite direction, losses will be incurred. The further the price moves in the opposite direction, the bigger your losses will be. For example: the required margin for a particular CFD share is 10% of the value of the share. If the share increases in price by 10%, the CFD trader will profit 100%. Conversely, if the share falls by 10%, the trader loses the full amount.

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The power of leverage

CFDs trade on leverage. This is a trading procedure giving the trader more buying power, increasing exposure to an asset without committing to pay the full purchase price to open a trade. Leveraging can work for or against you. The positive side of leverage in Contracts for Difference is that a small deposit provides the trader the same profit earnings as one would receive in traditional stock investing. The negative side of leveraging is that when a speculated asset trades negatively from your forecast, the losses are far larger and can exceed your deposit or ‘margin’. We recommend that the novice trader makes use of our 22 trading coaches equipped to assist with the understanding of the mechanics of leverage. It is imperative to be trained before committing your capital.

Many CFD traders are oblivious to the dangers of trading CFD. Without knowledge and understanding about leverage can negatively impact one’s portfolio, one trade can wipe out a whole portfolio. It is advisable to continuously track the asset’s position and constantly measure risk which may incur should a trade move in the opposite direction to one’s forecast. If you are looking to diversify your portfolio, head to our day trading Ireland page.

Margin

Your CFD online trading account will be open for trading once the deposit is received. This deposit is called margin. The percentage margin calculated varies from asset to asset. Consider margin to be a kind of ‘good faith’, a kitty that is essential to open a new trading position. Margin is a percentage of the full amount of your trade. So if your CFD broker requires that you deposit a 2% margin, the leverage amount is 50:1. nextmarkets pools everyone’s margin together and places trades with the interbank system. Margin is returned to you once the trade is closed.

Margin call

When the capital in your CFD trading account has been depleted, falling below the minimum amount required to hold your trade open, a margin call is made to you by your broker requesting that you top up your CFD account with additional funds. When your account is in a deficit, below the requirement, the status of your account is “on margin call”. If you are able to top up your account by adding more funds, then your trades will remain open. Should you not be in a position to deposit more funds into your account, your trades will be closed. Any losses incurred will be realised, which means that your open positions can be totally liquidated.

You can avoid margin calls by keeping an eye on your account balance and asset performance regularly. Risk management should be tight on every open position. It is also of importance that our policy on margins and risk are fully understood. We are committed to providing fully transparent execution and assistance to meet your needs for your understanding of the process. If you do not have a rock-solid comprehension of these concepts, you can blow your trading account out of the water.

Risk management is crucial

The most important control and management technique of online trading is repeatedly overlooked. This is risk management. At nextmarkets CFD trading Ireland, we provide our traders with risk management tools to protect your account from excessive volatility which can jeopardise your portfolio. CFD trading involves risk. Risk Is the potential and probability that the expected return of your CFD trade could fail to deliver the expected return. Managing risk reduces losses and protects things getting out of control in volatile markets.

What is your risk tolerance

For a novice trader, defining one’s risk tolerance can be quite intimidating. Risk tolerance is the amount of your CFD account that you can afford to risk on each trade. A 5% risk exposes the trader to a somewhat aggressive and large scale risk exposure. Conversely, 1% of the total of your account would be considered a moderate and conservative choice. A formula to calculate risk of trading an asset has been calculated by those in the know.  We recommend the novice trader makes use of the standard risk metric of 2%. To minimize your risk by diversifying investments, head to our forex trading Ireland page.

The key to protecting your capital

As a trader, preserving and growing your capital by protecting it is paramount and you can do so by making use of a stop loss. 

If you have a stop loss in place, the point of exiting the trade is either when your trade hits profit or hits stop loss. A stop loss order is an ‘instruction’ given in advance of an automatic trade which a trader gives to the broker. Stop loss orders can be used to reduce loss in short positions as well, by issuing a stop loss buy order. A losing position is inevitable in trading so a stop loss does exactly what it says. It stops the bigger loss which can occur in a trade.It allows the trader to decide the exact amount is comfortable as protection from serious loss.

Enter your stop loss on our trading platform

We aim to shape more successful traders dealing with the markets. We have designed what is the best CFD trading platform in Ireland with the trader in mind. The platform has been devised for traders by traders, as we understand the complexities of trading the markets. The benefit of trading through a sophisticated trading platform, coupled with up to 300 trading ideas per month, advice from 22 trading coaches, zero-cost commission on all trades makes this the best amalgamation for successful and profitable trading. Head to our stock trading Ireland page for more information.

The platform provides easy to follow up to date technical analysis, ensuring that you receive professional analysis directly onto your chart. An additional feature is giving you the option to move your limit, safeguard your capital and lock in profit in the desired direction. Your trades are at your fingertips. Our mobile app ensures that you never miss a trade. Once you test our platform you will agree that it is simply the best.

A trading plan is essential

There are many factors that contribute to volatility and a few examples of such are central bank rumours about inflation increases, political changes such as the election win of an opposing party in a global superpower. Economic policy changes such as dealings with China, or poor results in achieving data estimates etc can add to a volatile trading day. We should always bear in mind that the higher the volatility, the riskier the asset becomes. 

A well-defined, and tightly controlled plan is vital. Most often, traders make the mistake to believe that trading on ‘gut instinct’ is the only requirement needed. However a trading plan, which employs goals, strategy, entry and exit calculation, determining useless speculation early enough in the trade, and a lot of awareness in dealing with the emotions are essential.

Conclusion

Contracts for difference or CFDs offer a number of profitable opportunities to all traders, from the novice to the seasoned trader. Financial freedom can be realised by traders, who with a bit of time and experience, develop the skill and knowledge to trade profitably. Leverage makes trading CFD s easier. The positive side of leverage in CFDs is that a small deposit provides the trader the same profit earnings as one would receive in traditional stock investing.

The CFD trader forecasts the future price movement of the asset by use of technical and fundamental analysis. The amount profited and received on closing the trade depends on whether your forecast is correct. The advantage of trading Contracts for Difference is that if a trader forecasts that the price of an asset is bearish and the price will fall, a share may be traded in the direction of the forecast. Trading CFDs can be risky due to market volatility and the need to maintain an adequate margin due to leveraged losses. Make sure to browse through our how to buy stocks in Ireland page before getting started.

CFD trading Ireland FAQ

🤔 Why should I trade CFD with nextmarkets Ireland?

If you are considering investing some of your funds with online markets, you will need an online broker that manages to provide a comprehensive service. Head to our page to find out more.

 

🔏 How can I be sure it is safe to trade?

We will run through the safety methods that are put in place with each broker right here in our information resource. Head to our page to find out all you will need to know.

 

 

Depending on how you go about your trading, you could be in line to make some money whilst trading CFDs. Head to our page now to find out just how you can go about completing online trades.

 

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