Do you know what exactly DMA CFDs are? Well, DMA CFD (direct market access contract for difference) is a sort of a pact between the seller and the purchaser. To put it in a different way, individuals trade DMA CFDs in order to benefit from a rise or decrease in stock markets.
To go into more details it should be added that this contract specifies that the purchaser receives a particular amount from the seller. This sum, is a difference between the present value of an asset and its value at the time of trading.
So, to put it simply, a DMA CFD is a financial product that gains more popularity with day traders and short term investors.
As every financial product, DMA CFD has benefits and drawbacks and if you consider DMA CFD trading then you need to be aware of such aspects.
Let’s start with the pluses of DMA CFD trading.
First of all, you need to understand that the popularity of DMA CFDs is predetermined by some considerable benefits and one of the key ones is leverage. The truth is that generally leverage is 10:1 and sometimes even 20:1. It goes without saying that with such leverage it is possible to use a small deposit to make bigger profits. One more significant benefit you should take into consideration before dealing with DMA CFD trading is that using DMA CFDs provides the ability to go short and go long. Consequently, this means that you will be able to benefit from rising and falling markets.
Secondly it should be stated that most of DMA CFD providers allow 24h trading. This is really convenient because you can choose the time that is the most comfortable for you. Moreover, the process of trading is a really quick one since it doesn’t involve dealers - you do it on your own!
The third positive point to pay attention to is gaining significant profits in short durations. It is also useful for you to remember that you will be able to pick from lots of investing options, for example commodities, currencies, assets, and so on.
And now let’s have a closer look at disadvantages of DMA CFD trading.
The point is that sometimes leverage may end up being disadvantageous for you. For example, if the case is that you invest a small amount of money and the stock prices drop by a really high percentage, in that single trade, you will lose more than you’ve invested.
It should be also pointed out that CFDs are not suitable for folks who are going to invest large amounts of money or to invest money for a very long period of time.
If you are looking for more information about DMA CFDs, visit this site.
Author Resource:
Brian Hays is a talented DMA CFD trader and writer having written a number of ebooks and articles on DMA CFDs and how to deal with the risks associated with them. You can find Brian's books and educational material relating to DMA CFDs on-line.
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