The financial instrument CFD appeared relatively recently, in the 1990s in Great Britain. It was on the London Stock Exchange that the Contract For Difference (CFD or Contract For Difference) first saw the light of day and was originally used to hedge open positions. A CFD is an agreement between an investor and a broker to exchange the difference in value of a financial product (security or derivative) between the opening and closing of the contract. 

By its very nature, a contract for difference is purely speculative in nature. It is a derivative financial instrument based solely on changes in the price of the underlying asset. It does not give you any rights to the underlying asset.

How do I trade with CFDs?

How do CFDs work?

It is an advanced trading strategy used by modern traders. A CFD investor does not actually own the underlying asset, but instead earns income based on the price change of that asset. Essentially, investors use a CFD trading platform to bet on whether the price of the underlying asset or security will rise or fall. 

Traders can bet on either an upward or downward movement. If a trader who has bought a CFD sees the price of an asset going up, he will put his stake up for sale. The net difference between the buy price and the sell price is deducted together. On the other hand, if the trader believes that the price of the asset will fall, he can place a sell position that opens. To close the position, the trader must buy an offsetting trade. The net loss difference is then paid in cash through their account.

Choose stocks for investment
Choose stocks for investment

Trading platform capabilities for trading CFDs in Qatar?

The value of the contract changes according to the value of the underlying asset without any deviation. On the trading platform, the CFDs are traded according to indicative quotes that are taken from the relevant stock exchanges. For currencies the quotes come from the Forex market, for stocks from the stock exchange, etc. It is important to follow the methods of fundamental analysis in order to trade successfully. It examines the factors that create the price movement. 

The CFD trading platform provides information about the quotes in real time. A quote is the value of a financial instrument at a specific point in time. It is influenced by both the seller and the buyer, so it is not fixed and is constantly changing. The quote value is the total amount at which a trade can be transacted. 

The CFD trading platform also offers tools for technical analysis, with built-in indicators and charts, making it possible to enter trades automatically.

Using charts to identify trading signals and price patterns can appear complex and cryptic at first glance. Beginners should first understand why technical analysis works as a window into the psychology of the market to identify profit opportunities. One of the main tools in technical analysis of the CFD platform is the charts. It is on them that we observe price changes and make predictions. 

Types of charts on the CFD trading platform

  • Candlestick chart: This is also known as a Japanese candlestick chart. It is constructed similar to a bar chart, but the result of the closing period is highlighted in colour and is called the 'body' of the candle. By highlighting the colour of candlestick bodies, it is more clearly visible;
  • Linear: the simplest type of chart; it is usually plotted by close prices of each period. It looks like a continuous broken line;
  • Bars: price movements are illustrated in a compact format; each period is represented by a bar and shows the opening and closing price, high and low.

Almost all indicators are based on moving averages and have different settings and display information. 

Best online trading
Best online trading

Types of indicators on CFD trading platform

Moving average. It is based on analysis of security quotations behavior and their moving average. One of the oldest and most common indicators, which belongs to trend indicators. A moving average is the result of averaging the price of a security over a selected period. It is possible to construct several moving averages by adjusting the number of time periods used in the calculation.

MACD indicator. It is intended for determining the future price movement of an asset with the help of correlation of two moving averages. A trader looks whether the lines on the histogram are above or below zero under the price movement chart of the marketable asset. If the lines have been above zero for a considerable amount of time, this is a signal of an uptrend, and vice versa. Accordingly, the lines cross zero in the corresponding direction to signal the purchase or sale of a particular asset. 

Relative Strength Index (RSI). Monitors price movements to determine if an asset is overbought or oversold. One way of interpreting the RSI is that when it is above 70 on the bar chart, it is a sign that the asset is overbought and a signal for a correction in its value. Conversely, when the indicator is below 30, it is a signal of a possible rise in demand and price. 

On-Balance Volume (OBV). The trading volume itself is a valuable indicator, but the OBV allows you to extract even more data. This indicator measures cumulative sellers/buyers pressure, adding volume on days of upward price movement, and subtracting volume on days of downward price movement. Ideally, volume confirms trends. A rising price usually goes next to rising trading volume, and vice versa, volume goes down on falling days.

The question of how to correctly read the charts on a CFD trading platform  in Qatar becomes almost the most relevant for a beginner. This skill allows us to evaluate the general trend and reliability of the chosen instrument and also confirms the correctness of fundamental analysis conclusions. The CFD trading platform has several tools whose main purpose is to facilitate the trading process for the trader. 

How to make money trading CFDs in Qatar?

The Qatar CFD trading platform is based on two classic strategies - long position or short position trading. A long position is opened when the price of the asset and the contract are expected to rise. In a short position, the trader anticipates that the value of the asset will fall and sells. Then it may enter into a long position believing the price will bounce back and move upwards. 

By trading short, you are likely to make a profit within a very limited time frame, which is why short-term strategies are popular on the CFD trading platform in Qatar. In this case, if the forecast of the downward trend is wrong, the investor will incur losses, which are the difference in the price of the asset at the opening and closing trades. If the forecast is correct, he will make a profit in the same amount.

A strategy in which contracts are both bought and sold is also possible. In this case, the assets should be as close as possible and the trend should be the same. If all conditions are met, this method significantly reduces risk and is recommended for beginners.

Commodity trading
Commodity trading

When operating on a CFD trading platform, it is imperative to use a stop loss, which automatically closes the trade when the price falls below a certain level, in order to avoid losses.

When trading on the best CFD trading platform in Qatar, the most common option is to open a short position using margin (collateral). Trading on margin involves your broker providing you with leverage using what you deposit as margin. In the case where the current loss on the position begins to exceed the amount of the margin deposit made by the trader, the broker issues a margin call (margin call). If this requirement is not met, the position will simply be closed with a current loss on it.

Leverage is the ratio of your own funds to the value of what you wish to buy or sell. The amount of leverage shows how much a broker is prepared to lend. With 1:5 leverage an investor can trade a sum that is five times the amount of their own money in their account and with 1:10 leverage that is ten times the amount. In practice, leverage is also expressed as a percentage, i.e. 1:10 leverage means that an investor must have 10% of the deal volume secured with his own funds, whereas with 1:2 leverage he needs 50%.

How do I trade on a CFD trading platform with leverage?

Before you start using leverage, we recommend that you explore what is the initial margin, and the minimum margin. The initial margin is the amount of margin required to enter into a trade, set by your broker. If the amount in the investor's account falls below this level, the broker will ask to return the loan. Such a notification from the broker is called a Margin Call. The minimum margin is half of the initial margin and is not allowed to fall below this amount. If the amount in the investor's account falls below this level, the broker will forcibly close the transaction so that the investor does not lose his funds and moreover his broker's funds.

In practice there is no need to make any complex calculations. All necessary indicators for margin position control are displayed in the trading terminal. The main enemy in the market is their own psyche, due to which beginners make mistakes or make belated decisions. You need to assess the situation soberly. Try it and you will surely succeed!

How to start CFD trading in Qatar?

The popularity of the CFD trading platform is due to the fact that you do not need to purchase the asset itself to speculate. In addition, the margin requirement (from 2%) is much lower than in the stock market. And don't forget that you can buy CFDs with a fraction of a standard lot, such as 0.1.

Trading with CFDs has numerous advantages, which have greatly increased the popularity of this type of financial instrument over the past few years. 

CFDs are an instrument that allows you to profit from price movements of assets without becoming their direct owner. Considerable brokers' leverage allows trading CFDs with relatively small deposits. However, one should understand that such trading is more risky. Only a competent trading system can give you confidence in this!

Registration on the platform
Registration on the platform

In today's world, online services facilitate the process of trading CFDs in Qatar. In order to start trading, you need to go through a simple registration procedure. You need to provide your personal details like name, email address and to confirm the registration process. After the registration, you can already start working on the best CFD trading platform in Qatar.

The CFD trading platform gives you an opportunity to try trading without fearing for your own savings by opening a demo account. There is no need to turn down the opportunity to try your forces on the demo account. A demo account gives you a chance to get priceless trading experience, learn how the trading platform works, and learn to manage your emotions, experiencing unexpected spikes in the market and unpredictable events, so that next time you will react less sensitively.

Choose an account to trade in
Choose an account to trade in

Once you are familiar with how a CFD trading platform works, you can then make a deposit into a live account. You can do this by transferring money via bank card, bank transfer or e-wallet. Depending on the chosen method of funding, the money will take from 5 minutes to 24 hours. Qatar CFD trading platform is open 24/7. You can log into the trading platform under your account anywhere and anytime. You will always be able to track your trades. Just do it!

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