Let’s say you enter into a Gold CFD contract at a current market price of $1,291 per ounce, believing the value of the commodity will rise by a certain time. If the price of Gold has risen when your contract expires, you’ll make a profit based on the difference between the buy and sell price.
However, if it’s fallen below the buy price at the point when the contract expires, you’ll lose the trade.
Let’s again say you want to enter into a Gold CFD contract at $1,291 per ounce, this time believing the price will fall. If it did fall by the time the contract expired, you’d make a profit. If it had risen, you’d incur a loss.
Profiting from downward price movements is one of the unique aspects of CFD trading; if you were purchasing physical bars of Gold you could only profit by selling it for more than you paid for it.
Trading metals as CFDs with Axi means you’re able to take advantage of leverage. This allows you to use a relatively small amount of capital to gain full exposure to a trade. It’s important to understand that while applying leverage offers the potential for larger profits, it can also increase risk and lead to larger losses, sometimes greater that the margin in your account.
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