With an ongoing low interest rate environment and uncertain global economy, investors are seeking other ways to maximise returns.
One of these is through trading contracts for differences, or CFDs, a derivative that enables you to invest in markets without owning the underlying assets.
Trading CFDs can allow you to make large multiples of your initial investment, and not just in rising markets, but, critically in these uncertain times, they also enable you to make returns when markets crash. They notably do come with some downside risk so it’s important to understand how they work and what the exposure is.
Lee Yu is CEO of CFD trading platform TMGM, which is rising in global profile and recently announced a multi-year sponsorship of the Australian Open tennis tournament, starting in 2021.
Yu says trading in CFDs has been democratised and is no longer “just for the big boys”, opening up a 24-hour world of investment possibilities for Australian households.
But as a sophisticated investment product with a high degree of risk, are CFDs for everyone?
Yu says to get started, investors need to have an understanding of the risks, be the type of person who takes time to read about the market, has strong discipline, and above all has “an interest in and passion for trading”.
It’s also true some people who have heard of CFDs are concerned about leverage, with the potential to lose more money than they have invested.
“From our point of view leverage is really not a good or a bad thing,” Yu says. “We can see it as a double-edged sword. What it does is amplify the good and bad effects.
“Many investors use leverage all the time. For example, when you buy an investment property and you borrow money from the banks, that is using leverage, too.
“What’s more important is to be able to control the use of leverage – and make leverage work in your favour.
“Another typical misunderstanding is that trading CFDs is hard.”
Yu says with TMGM, you can open an account and be trading in three minutes with a deposit as low as $100. This gives you access to over 15,000 trading instruments across a range of asset classes – including forex, shares, precious metals, energies and indices although he urges new traders to focus on “what they are familiar with” to start.
CFD trader with TMGM, Peter Christodoulou, is the founder and director of three Sydney businesses, Bodytech Automotive, Castle Hill Smash Repairs, and Castle Hill Sand Blasting and Power Coating.
He says a passion for trading and a slowdown in business activity during COVID led him into the world of CFDs.
“I was attracted to trading CFDs mainly because I wanted to work smarter not harder,” Christodoulou, 55 and a father of four, says. “I wanted my profits to work for me. Now trading CFDs has become a passion of mine. It’s exciting. I love the adrenalin rush.
“Trading CFDs gives me the freedom to choose how and when to trade. I acknowledge this is not for everyone – but what is?”
He says the ingredients to his trading success have been “patience, persistence and commitment” as well as accessing the speed offered through the TMGM platform.
TMGM chief marketing officer, Angelo D’Alessio says matching this speed with the adrenalin rush of professional tennis was the inspiration behind sponsoring the fan favourite Speed Serve at the Australian Open.
D’Alessio says the deal secures brand visibility for TMGM (TradeMax Global Markets), which recently rebranded from TradeMax, with a high profile on-court asset that engages fans both in the stadium and through broadcast.
“Considering speed of execution is one of our main strengths, aligning TMGM with the AO Speed Serve seemed like the perfect place for us to be, and to bring our brand to life at this major event,” he says.
The sponsorship is an opportunity to further showcase the offering to interested Australian investors and is also part of the company’s globalisation strategy.
Yu says he is confident the sector has a “bright future” locally after ASIC recently acted to tackle client investment risk, introducing a raft of changes including stopping losses on CFD positions exceeding the cash in investors’ trading accounts and reducing margins for retail investors.
Yu, who moved into CFDs after a long period of actuarial experience in the finance industry, welcomes the changes and says they are necessary to ensure the sector continues to develop to the highest standards.
TMGM simplifies direct CFD trading. Built with cutting-edge technology, turn-key support and an innovative structure, TMGM makes trading on the global markets easy. The platform empowers investors of all types to take full charge of their investment portfolio, combining lucrative CFD trading opportunities across 7 asset classes with access to 15,000+ products. Investors choose TMGM for the transparent trading environment, competitive pricing and lightning speed execution. When trading with TMGM, traders only have to worry about investment decisions – the platform does the rest. For more information about this trusted CFD trading provider, visit TMGM.COM
Source: Thanks smh.com