CFD Trading & Spread Betting
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The benefits of trading with us.
CFDs and Spread betting are financial products which allow you to take positions in the financial markets in an efficient and direct manner.
They are leveraged products so only a fraction of the total value of your investment needs to be deposited in your account in order to trade, with the remaining amount financed by 3SigmaMarkets. With leveraged products you should only use risk capital.
Benefits of Spread Betting**
What is spread betting?
Spread betting is a tax-free*, derivative financial trading instrument.
In simple terms, it’s a financial product that enables you to gain exposure to the global financial markets without physically owning the underlying asset – indices, cryptocurrencies or forex. In this way, it is very similar to a CFD product, however, it provides the trader with an extremely tax-efficient way to gain exposure to these financial markets.
Spread betting allows you to speculate on financial markets such as currencies, indices, or commodities and it gives you the freedom to go either long or short in that asset class. It allows you to speculate for example on whether a certain share might go up or down and you will profit according to the degree to which you are right.
Spread betting has two primary components to it:
1. The Spread – At 3Sigma Markets we provide our clients with the tightest institutional grade spreads, to reduce your transaction costs..
2. The Bet Size – the amount you are risking per unit of movement in the underlying asset. Spread betting is a leveraged product.
Benefits of CFD Trading**
What is CFD trading & investing?
CFD, short for “Contract For Difference”, is a derivative financial trading instrument. In simple terms, it’s just a product that enables you to gain exposure to the global financial markets without physically owning the underlying asset – indices, cryptocurrencies or forex.
The CFD price will mirror the price of the underlying asset, giving you that exposure. So if the price of the underlying asset goes up, so will the price of the CFD. Similarly, if the price of the underlying asset goes down, so will the price of the CFD. The CFD is an agreement between you – the trader and 3Sigma Markets, the provider – to exchange the difference in value between the opening level of a particular contract and the closing level – for example, the difference between the price at which you bought it and the price at which you sold it.
These contracts allow you to speculate on financial markets such as currencies, indices or commodities. CFD trading and investing allows you to speculate on price movements of the underlying asset in either direction – allowing you to have a long or short position on a stock for example. CFD’s allow you to speculate on price movements in either direction. CFD trading is a leveraged product.
So what does it all cost the trader?
As we mentioned above CFD and spread betting prices fully mirror the price of the underlying asset you are trading. The price is taken directly from the underlying exchange of the asset and (or) delivered by 3Sigma Markets – your liquidity provider.
3Sigma Markets does not charge any exchange fees and offers ultra-tight spreads on all the asset classes we offer our traders – your success is very much in our interest and reducing transaction costs for our clients is all part of this process. The trader’s transaction costs are made up of the spread – the spread is the difference between the bid and the offer in the price or the price at which you can buy or sell the underlying asset. 3Sigma Markets provides our clients with ultra-low spreads to reduce transaction costs and a commission is charged per notional amount traded. The ultra-low spreads and commission are the trader’s cost of transacting in that particular financial market and is our compensation for enabling these trades. Please see Top FAQs for further information on our commission structures.
For example, if the spread for crude oil trading is $0.03 USD, the cost for opening a 10 barrel-position is $0.03 X 10 barrels = $0.3 USD. Nearly all CFD trading and spread betting are traded on market spreads. The spread of an instrument is affected by the liquidity of the instrument. The more liquid the instrument is the narrower the spread will be and the lower the transaction cost for the client.
Leverage
Leverage, under the correct regulatory structure, can be a positive tool for our clients at 3Sigma Markets. It can help to provide for both the retail and professional traders a level playing field in the financial markets.
Leverage enables traders to hold trading positions in the markets that are larger than what one’s own capital would otherwise allow. It allows you to fully participate in the total income from the trade, but only providing a fraction of the initial investment required.
It is of course however important to remember that the profits and losses are determined by your position size, and as leverage trading can magnify profits it can of course increase your loses and needs to be utilised responsibly.
