• How to open XTB’s Forex and CFD account?
• Why you should trade with XTB?
• What is CFDs?
• Advantages of online CFD trading
  1. CFD offers high leverage
  2. Short selling to profit from falling market price
  3. Trading CFDs for 24 hours
• CFDs give you dividend equivalents
• Risk of trading CFDs online

How to open XTB’s Forex and CFD account?

With XTB, you can open an account for free.

The account opening process may only take a few minutes to complete.

Follow the steps below to open XTB’s FX trading account today.

1. Go to XTB Official Website.
2. Go to XTB’s account opening page.
3. Type in your email address and choose the country residence.
4. Complete online registration forms.
5. Receive login credentials for your account with XTB.
6. Log in to XTB Official Website to make a deposit and download XTB’s trading platforms.
7. Log in to XTB’s trading platform to start trading.

With XTB, you can invest in thousands of financial markets including Forex and various instruments in CFDs (Stocks, Commodities, Precious Metals, Indices etc).

Note that the certain service conditions may be different depending on the country you reside in.

For more information, please go to XTB Official Website and find out more.

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Why you should trade with XTB?

XTB’s mission is to create the most effective and convenient environment for trading derivatives on FOREX, commodities and equity OTC markets.

From XTB’s beginnings in 2002, the broker has strove to provide world-class services for all clients, which has resulted in a leading position in the global market.

The most important factors for success, as far as XTB is concerned, are people as they determine the quality of customer service and technology.

The harmonious combination of those elements is crucial for effective competition in the global OTC market of the 21st century.

In order to achieve XTB’s aim, they:

• provide one of the most sophisticated trading platforms in the world;
• take care of XTB’s Clients, from their first experience with OTC market;
• introduce transparent Rules and regulations at every level of cooperation between XTB’s company and the Clients;
• ensure safety of funds through our participation in the National Depository for Securities and being regulated by the appropriate Securities and Exchange Commissions of the European Union.

XTB’s core business is providing brokerage services on the OTC markets.

XTB does not provide an investment advisory service, however, XTB’s Dealing Room is open 24 hours a day 5 days a week to help you with any and all other problems you may encounter during your journey into the world of global finance.

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What is CFDs?

XTB offers trading platforms (xStation and MT4) where you can trade Forex and CFDs.

Forex is the most traded financial market among online investors, while the popularity of CFD trading is growing rapidly.

Other than the Forex currency pairs, all markets are offered in a form of CFDs.

The CFD products include Commodities, Indices, Cryptos, Stock CFDs and ETF.

First, CFD is an abbreviation that stands for Contract For Difference, which means a difference settlement transaction.

In order to capture the image, let’s see a simple example, which is the version of FX.

Conversely, FX can be said to be a financial product focused on the currency in CFD.

CFD covers various asset classes, including global stock indexes, stocks, products such as gold and crude oil, and bonds, and more than 10,000 types of various markets.

It started in the early 1990s in the UK and 1997 in the US, and is a very major financial product with a 30% share of the total financial market in the UK.

It’s easy to imagine how convenient it is to have such a large share in the UK, which is a financially advanced country, and there are many people who trade.

So what is the merit of CFD?

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Advantages of online CFD trading

There are mainly three attractive points in online CFD trading, which are Leverage, short trading, and 24-hour trading.

There are three attractive points of CFD.

1. CFD offers high leverage

With CFDs, you can invest in more than 10,000 types of investment targets (stocks, stock indexes, products, bonds etc.) and invest with a few to several hundred times of leverage.

In general CFD brokers, leverage is around 500 times.

Of course, this will cause losses if you trade poorly with a double-edged sword, but if you make good use of it, you will be able to earn a large amount of profit with a small amount of money.

Since CFD is a difference settlement, it is a transaction that does not deliver the actual product.

If you want to trade for 1 million USD, you usually need to prepare 1 million USD and exchange it for a real product.

However, in the case of CFD, it is possible to trade if you prepare only a fraction of that, so you can invest from a small amount even if you could not invest because the minimum investment amount was too high before.

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2. Short selling to profit from falling market price

In the case of ordinary stock trading, even if you can buy stocks, you could not sell from the beginning (so-called empty sales), as there was a place like a market for professional investors and the threshold was high.

However, in the case of CFD, you can easily enter from selling (short) for various markets.

For example, suppose New York Dow is expected to go down.

At this time, “sale (short)” is inserted at the current price.

As a result, if the market price drops as expected, you will settle at the price below the selling price.

The profit will be the amount of decline between when you make a sale and when you make a payment.

Of course, on the contrary, if it rises, it will be a loss.

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3. Trading CFDs for 24 hours

If you are working day-time, even if you want to buy stocks, trading hours are often during working hours, so it is quite difficult to deal with a computer to make trades.

But there are always markets around the world that are open at that time.

For example, in your country it may be lunchtime, while in the United States it’s at night.

Therefore, it is one of the major characteristics of CFD that you can trade the world’s financial market at anytime.

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CFDs give you dividend equivalents

If you have open positions of CFD product, you can receive the dividend equivalent amount if the stock you are holding has a dividend.

Of course, the dividend equivalent is calculated according to the transaction amount, so the dividend equivalent is also leveraged.

Since the transaction amount can be several times higher than the margin amount, the dividend equivalent amount seen from the margin amount may be a very high yield.

If you have a sell position, you will pay the dividend equivalent amount.

This is not only for individual stocks, but even if you have open positions in the stock index CFD, if there is a dividend for the constituents of the stock index, the dividend equivalent amount will be granted

Of course, when a dividend is paid out, the value of the stock or index is traded with the value of the dividend reduced (so-called “dividend exemption”), so the value of the holding position is reduced by the amount equivalent to the dividend.

You can also adjust your positions well and aim to get high dividend yields each year.

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Risk of trading CFDs online

Of course, CFD does not have only merits.

When you start trading CFDs, you could soon fall into the illusion that you will be able to make a lot of money, but the financial markets aren’t so gentle.

Especially in the case of CFD, there are some points to be noted, and if you do not properly grasp the market, you may get an unexpected loss.

First and foremost is leverage.

As mentioned above, leverage is a very useful trading method if used properly, but if you trade without understanding the mechanism well, you will trade more than your ability and you will lose more than you expected.

Also, if you just hold the actual stock, you may recover someday, but if you have a high leverage, it can be fatal.

There is also a possibility that it will be necessary to cut losses properly.

In addition, if the price falls suddenly and the margin maintenance rate set by the broker cannot be maintained even temporarily, it may be forcibly lost.

Therefore, you must first understand the system properly before you start trading.