Trading financial instruments such as CFDs and spread bets carries a high level of risk and may result in the loss of your entire investment. Ensure you fully understand the risks involved and seek independent financial advice if needed before making any trading decisions.
Trade Forex with confidence
About
CFD Trading
What is the CFD Market?
CFD trading, or Contract for Difference trading, is a form of financial derivative trading where two parties exchange the difference in the price of an asset between the time the contract is opened and when it is closed. It allows traders to speculate on the price movements of assets like stocks, indices, commodities, and more without actually owning the underlying asset.
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Depending on the market, trades may involve spreads or commissions. Carbon’s unique platform ensures that CFD prices are driven by actual market movements.
Is CFD trading right for you?
CFD trading may be suitable if you’re looking for a flexible way to trade rising or falling markets using leverage. However, it's important to note the risks — losses can exceed your initial deposit.
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At Carbon, we offer a free demo account to practice and access to educational resources to help you trade confidently.
CFD Trading Instruments
1. Commodities
Commodities are basic goods like gold, oil, and wheat that people trade. These goods are essential to industries and everyday life, and their prices can change based on supply, demand, and world events.
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2. Crypto (Cryptocurrencies)
Cryptocurrencies are digital currencies, like Bitcoin and Ethereum, that operate online without needing a bank. They are popular for investments and online transactions, and their value can go up or down quickly.
3. FX (Foreign Exchange)
The Foreign Exchange market is where currencies like the U.S. Dollar or Euro are traded. People buy and sell different currencies to profit from changes in exchange rates. It’s the largest financial market in the world.
4. Indices
An index tracks the performance of a group of companies in the stock market. For example, the S&P 500 tracks 500 big companies in the U.S. Indices give an idea of how the overall market or a sector is doing.
5. Stocks
Stocks represent ownership in a company. When you buy a stock, you own a small part of that company. As the company grows, the value of the stock can rise, and you might also earn dividends (a portion of the company’s profits).
Leverage on Carbon
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Leverage is a powerful tool for traders, allowing them to control positions larger than their initial capital by borrowing funds from the broker. On the Carbon platform, leverage is tailored to each trading symbol, ensuring the best balance of opportunity and risk. For instance, the leverage for trading GBPAUD might differ from that of BTCUSD, based on the asset's volatility and market dynamics.
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How Leverage Works
Leverage is expressed as a ratio, such as 1:10 or 1:100, and directly impacts the size of the position you can control relative to your available capital. Here’s an example to illustrate:
Example: With $1,000 in your account and a leverage of 1:100, you can control a position worth $100,000.
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Understanding the Risk of Leverage
While leverage can magnify potential profits, it also increases potential losses. Even a minor adverse movement in price can result in substantial losses, which may exceed the trader’s initial deposit, depending on the leverage level and position size. Therefore, careful leverage selection is crucial.
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The optimal leverage level is influenced by your risk tolerance and trading experience.
Many seasoned traders opt for lower leverage ratios to maintain better risk control.
As you gain experience on the Carbon platform, finding a leverage level that suits your strategy will be key to long-term success.
