CFDs by definition stand for Contracts for Difference, which comes up with a mutual agreement between traders and the broker houses. In trading CFDs, profit is made from the movement of prices from trader’s entry and exit point(s). In this way the consideration is the change in price but not the value of the asset.
To gain a significant profit in CFDs using proper trading method, it is important to choose a right CFD broker. If you are looking for a CFD broker and are confused about the right one, then you have come to the right place.
CFD Trading South Africa
Are you planning for CFD trading in South Africa? Or look for the proper guidelines to start CFD trading from South Africa?
Here is a shorter outline for you before you start CFD trading.
What is a CFD?
Contracts For Difference, popularly known as CFDs, are a specialised and favourite over-the-counter (OTC) instrument among traders which allows you to trade with the price movement of the instrument.
CFDs and other similar instruments allow clients, or more specifically traders and investors, to trade freely and independently without owning the assets or instruments but taking decisions on their values on electronic platforms. Flexibility to buy or sell CFDs without physically owning them, but trading on price movements is the main attraction of trading.
Why Trade CFDs?
If you are one of those planning CFD trading from South Africa, here are the reasons that you might consider.
CFD trading in South Africa can be a secure investment option for you. Contract for difference aka CFD is basically a security between more than one party for exchanging the difference between the opening and closing price of contracts. The two parties are allowed to come up with the final contract using liquid money instead of physical goods or securities mostly in electronic platforms nowadays.
Just like hundreds of other CFD traders, by trading CFDs you can avail all the trading and investment benefits which are related to owning securities rather than possessing those securities. Speculating, analysing markets and prices of such securities, investors or traders can gain significant profit by taking long or short positions. Alternatively, these contracts can be used by any trader for fund hedging in their accounts which is an additional help to manage risk of different kinds in their portfolios.
CFD Trading Methods
There are various trading strategies but CFD trading is mainly divided into two types of trading methods. These are:
- Long Position
- Short Position
Long position is the trading decision or position of a trader/investor when he/she decides to buy the asset or securities. This trading position usually means that the market speculations, observation and strategy of the trader shows a possible rise or growth of the particular security. That is, the market price movement of the security will rise up. Hence the trader decides to buy the CFD.
The short position is exactly the opposite position of a trader regarding the market condition.
In a short position, the trader decides to sell some or all of his selected security to gain profit from it. In a short position, the CFD is expected to see a decline in price according to the market movement.
CFD Brokers in South Africa
In modern days, trading and investment is a hectic work when you don’t have prior knowledge on it. After deciding to invest in and trade CFDs, selecting the right CFD broker is a difficult task. Especially for those who have no prior knowledge or are almost new in this field of trading and investment.
If you are a CFD trader looking for CFD brokers in South Africa, then you are finally in the right place. Read these guidelines and follow these steps to select the right broker for you from CFD brokers in South Africa.
There are so many CFD brokers in South Africa and the big question is how to select one? Well, before choosing a broker, know the broker and know about their operations so far. There are different criteria to choose from but the first consideration should be the authentication and regulation of the broker.
Is your CFD broker legal?
Ask the question before selecting. Check if the broker is permitted by the country’s law and regulation authority. If the broker is operating but not regulated by the proper authority, do not trade with them.
How old is your broker?
Many CFD brokers in South Africa are operating from abroad and some are new. A new broker may have lucrative offers. But check how long the broker is operating in your country or abroad. Many new CFD brokers come out with scams and lotteries and are not regulated by proper license. Avoid this type of broker immediately. An older and multi-national CFD broker is more acceptable and reliable than a new broker offering a $50 account opening bonus.
Offers or scams?
Before opening an account, properly check and test broker’s offers, utilities etc. If you don’t check the offers and facilities of the broker, it may cause difficulty for you at a later time while managing your fund. For example, your broker may not allow hedging of funds. But under market conditions, if you need to hedge your funds they might suspend your account. So, choose your broker carefully depending on your trading strategies, amount of money you are going to trade etc.
IQ Option, Binary.com, Deriv.com, 24option, and OlympTrade are some of the reputed CFD brokers in South Africa. If you are too confused about choosing your CFD broker, simply check the above brokers’ offer and choose one of them.
These brokers have different offers on CFD trading leverage, account opening bonus, trade volume bonus etc. Some also offer free educational materials for new CFD traders. Choose the best one that suits your requirement.
Here, we will review some of the top CFD brokers in South Africa that may help you choose the right one.
While we were choosing a CFD broker, our primary choice criteria was broker with the maximum credibility and regulations of the brokers by concerned authorities.
Here are the details.
IQ Option is one of the top 5 brokers on our review list. IQ Option is regulated by CySec and other main EU regulatory bodies. The next key point about this broker is the leverage limit. It provides leverage up to 500 which is a nice option for mid-level traders.
- Low CFD fees
- Free deposit and withdrawal
- No negative balance protection
Binary.com is a regulated broker and is surely one of the top major CFD brokers in South Africa without a doubt. Since making their mark in the market, Binary.com refocused on client service and gaining significant attention from professional traders.
- Low fees
- Easy and digital account opening
- Low minimum deposit
- Limited product portfolio
Deriv.com is regulated and permitted by European Securities and other market authorities and financial bodies. The company is a London-based broker also working as Forex, Crypto and CFDs broker in South Africa. The company has relatively low fees and high leverage scopes for traders.
- Huge tools and web content for traders
- Withdrawals are fast and made via the same method used to deposit
- Limited product portfolio
24option is a prime choice for traders because of its reputation and reliability over decades. One of the most reliability of 24option is their efficient customer service, which is perhaps best among CFD brokers in South Africa.
- Free withdrawals and deposits
- Offers educational services, webinars etc for
- No research or technical analysis data
OlympTrade offers great opportunities to start CFD trading. You can get leverage of 1:400 with this broker. The broker is regulated by the International Financial Commission (IFC) and headquartered in St. Vincent and the Grenadines.
- Great customer service
- Low minimum deposit
- Limited product portfolio
CFD Trader in South Africa
Nowadays trading and investment has gained significant attention among people. Trading CFDs is one of the most popular choices among them. Though Forex, stocks, crypto currencies, commodities have vast markets and among traders’ choices, a great number of people have chosen to be CFD traders in South Africa.
CFD is mainly a trading contract between more than one parties.
One of the parties is the trader and the other party is the broker who facilitates the trader to trade the security. In the contract the parties agree to pay on the difference of a certain asset/commodity based on the market opening and closing price. In such a condition and based on the market price of that certain asset, the trader makes profit or loss on his taken position. Usually the trader takes his position on speculating the rise or fall of any particular asset.
In trading CFDs, a trader or you do not own the asset eventually, but you are speculating the price of your selected securities when trading with a broker. You make profit from a trade when the price moves in the favour of your speculation based on analysis or make loss when the opposite happens.
There are even many brokers which are directly helping CFD traders in South Africa and you can get more help from them beside this information below.
Let’s see some of the benefits that you may get as a CFD trader.
Leverage – CFD has higher leverage than any other typical trading. A relatively small margin can give you more benefit as a CFD trader. As an example, stocks or foreign exchange have high volatility and may rise up to 30%. Whereas low margins still will allow you to open big positions and make more profit with lower losses.
Accessibility – Reliable and top brokers will offer you to enter in almost any market as a cfd trader in South Africa.
Cost – CFD trading has a significant benefit in terms of cost. You will find brokers in South Africa charging too little or as little as zero for CFD trading. Which is a great benefit to start investing as a cfd trader in South Africa. The spread size depends on the market volatility of underlying assets.
Most of the markets usually ask you for a higher amount of money to start trading. This bars your number of trading positions from making a profit. But in CFD trading, you can start with as little as $500 to $5000 to open an account and start trading.
Diversity – No matter what your interest is, the better option is to start trading with CFDs as a trader in South Africa. Then you can continue with other instruments like commodities, cryptocurrencies, and Forex if you want.