Contracts for Difference are relatively recent, dating back to the 1990s. Originally, they were focused exclusively on stocks, but nowadays their underlying asset can be stock indices, currency pairs, cryptocurrencies and other underlying financial instruments. Selling or buying a financial instrument through a CFD does not entail documenting the rights to it (i.e., you certainly have the right to the concluded contract, but not the rights to the subject of that contract).

For example, if you have a CFD contract for the purchase of 1000 Microsoft shares, you will not own the shares and you will not own them. So why would you do such a deal? The truth is very simple - the deal is done only to get the difference in price. It is done for speculative purposes. It is easier to buy a couple of CFD contracts on the same stocks, and when the price goes up, close them with profit which is the difference of closing and opening price minus a small commission from the broker. 

How do I trade with CFDs?

The contract for difference (CFD) is a common derivative instrument, in which the asset on which the CFD is based is the difference in price. With a CFD trading platform in Nigeria, you can make more money in a limited period of time by buying cheaper and selling dearer.

Choose stocks for investment
Choose stocks for investment

Trading platform capabilities for trading CFDs in Nigeria? 

Overall, trading on the best CFD trading platform in Nigeria has certain advantages that have greatly increased the popularity of this type of financial instrument during the last few years. 

Pros of CFD trading platform

Huge choice of instruments. CFDs are available for almost all financial instruments. It is the best choice for diversification lovers.

Hedging. Hedging can also be used for profit. If the movement of two financial instruments is very similar, you may open a long position in one instrument and a short position in another. Profit will be made by the difference in the movements of these instruments or by a positive swap.

Large leverage. CFDs provide the opportunity to work with much higher leverage (up to 1:500) than the stock market. This ensures low margin requirements starting at 2%. Depending on the underlying asset (e.g. stocks), the margin requirement can be as high as 20%, but no more. This allows traders with little capital to access markets previously inaccessible to them.

Access to all markets from a single platform. The CFD trading platform offers instruments from all world markets. This means that the trader can easily trade all the world's markets from a single trading platform.

There are no restrictions on short positions. Some markets have rules that prohibit short trades at certain times or require that a trader borrow an asset before opening a short position. The CFD market generally has no limitations on short positions, and you can open a short position at any time without incurring additional costs.

Execution without commission. As mentioned above, trades are executed instantly and often without any commissions.

No restrictions on trading. While some markets do have limitations on the capital available for trading, the CFDs do not.

Disadvantages of CFD trading platform

Not suitable for scalpers. All costs are embedded in the spread, which basically does not allow you to make quick trades and earn on the smallest fluctuations. 

Weak regulation. CFDs are not as regulated as the stock market, so only trusted brokers with good reviews. 

Choosing a CFD trading platform, every trader needs to weigh the pros and cons. The main thing in a trader's work is profit, no matter what financial instrument it is earned with. That is what we wish you!

During the years of using the CFD trading platform in Nigeria  a lot of different indicators have been created, which help traders to carry out complex analysis of the market. Technical analysis is mathematical functions based on price or volumes. They can not only help to analyse the market, but also give trading signals directly. Some indicators work well in a trend, some work well in a flat, some are universal.

Best online trading
Best online trading

Popular indicators on the best CFD trading platform include: 

  • Moving Average (MA). Moving averages are an indicator of the average price movement. They are tools of computer analysis, which smooth price fluctuations by averaging over a certain time period.
  • Moving Average Convergence-Divergence (MACD). It is a combination of three exponentially smoothed moving averages. It looks like a histogram with a signal line overlaying it.
  • Relative Strength Index (RSI). Relative Strength Index. An oscillator which measures the relative market strength by comparing the absolute amounts of market growth and decline. 
  • Bollinger Bands (BB). The Bollinger Bands help identify the moment of transition from a quiet market to an active one, and vice versa. The indicator is plotted on the price chart and formed by three moving averages with specified deviations.
  • Stochastic Oscillator. Stochastic indicator. It uses the condition that in case of ascending trend the closing price tends to the maximums of the period, and in case of descending trend the closing price tends to the minimums.
  • Ichimoku Kinko Hyo (Ichimoku). It is a complex indicator, consisting of five lines, three of which are moving averages and two are their derivatives. Ishimoku does not only define the presence of a trend, but also gives information about the support and resistance zones.
  • Fibonacci lines (Fibonacci lines). On the price chart there are indicative correction levels built on the basis of the famous mathematician's sequence of numbers.

Technical analysis is the minimum knowledge base required to seriously engage in trading. Knowledge of basics of technical analysis will help you in future to master the market and create your own trading system. 

How to make money trading CFDs in Nigeria? 

Over the life of the stock market, investors have developed many trading strategies. But almost every CFD trading platform in Nigeria strategy employs one of two ways to make money on price differences. A quote, in trading, is the value of a financial instrument at the current moment in time. A quote consists of two prices. These are the Bid price (at which you can sell the financial instrument) and the Ask price (at which you can buy). The Ask price is always higher than the Bid price, the difference between the two is called the spread.

One of the key terms in exchange trading is "long" - "short". Or, to put it another way, long and short.

The long position (or long) refers to the traditional situation where an investor buys an asset with the expectation that its value will rise. Investors resort to this type of trading when they expect the price to rise. The idea of a long position is to buy a stock when it is cheap, and sell it when it is up. The long position is one of the most popular trades on the stock market. It is the easiest to understand, and that is why newcomers to the stock market typically start there.

A short position (or short) is opened by an investor in the hope of profiting from a fall in the market quotations. It means that the investor borrows from a broker, which is becoming cheaper, and sells it in order to buy it back later, but at a lower price and, accordingly, to gain profit again. In this case, he borrows the securities from the broker, sells them at the current price and later, when the security really fell in price, he buys them back at a lower price and fixes his profit. 

Commodity trading
Commodity trading

A lot of people do not understand the first steps in opening a short position on a CFD trading platform. Namely, how you can sell something that you do not have. Here the trader implements a margin trading scheme.  Margin trading refers to trades that sell assets that have been provided against a stipulated amount (margin). In this scheme a commodity is sold in order to buy and return a similar one after some time. Such a sale without cover is called a short, short position. The scheme allows making profit when prices are falling. If a security loses value, the trader buys it at a lower price and returns it to the broker, keeping the profit.  

In the beginning, when trading on a CFD trading platform, it is not recommended for novice traders to trade on borrowed funds. Such trading is associated with risk.

By the way, the principles of margin trading are also valid for long positions on the CFD trading platform in Nigeria. In this case we mean the situation when a broker provides the trader with additional funds to enable the latter to buy more assets, and thus increase profit. Risks are inevitable, but they are minimized by the fact that the broker also creates a list of marketable securities, for which it is reasonable to open a long position. 

There are also limits on the trader's own funds, with which he is going to buy assets. In addition, the broker fixes the minimum value of the asset, upon reaching which in case of a negative trend reversal the long position will be closed automatically. If the trend is positive, the asset will gradually increase in value, the trader sells it at a certain moment and fixes the profit. It should be understood that long positions can be opened using margin trading techniques, and only with investor's personal funds. Short positions are possible only with borrowed funds. 

How to start CFD trading in Nigeria? 

Online services facilitate the process of buying assets by using technology and offering new forms of investing. Essentially, the best CFD trading platform in Nigeria is used by investors to place bets on whether the price of the underlying asset or security will rise or fall.

Registration on the platform
Registration on the platform

If after reading this article you are seriously interested in trading CFDs in Nigeria, the first thing you need to do to get started is to open an account with a CFD trading platform. To do this, you need to register with your personal details (name, email address) and confirm the registration process. It is important to do this so that you always have access to the best CFD trading platform and trading accounts available.

Before you open your first trade, you will need to fund your brokerage account. It is simple and free! This is usually done as follows: you go to your broker's website, and click on the "Deposit" or "Deposit" button, and you are offered one of the payment systems. Depending on the deposit method you choose, the money will take anywhere from 5 minutes to 5 days to arrive.

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

If you are new to the CFD trading platform, we recommend that you first open a Demo account. There you will get familiar with the appearance of the charts, the system and the instruments. All the operations on it are conducted with virtual money only, while the quotes and the trading process are identical to the real market. Try it and you will succeed!

The financial services provided by this website carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose