If you have been in the investment industry, you most likely encountered the phrase “At the lowest possible price”. This phrase instructs the brokerage to have a purchase on the smallest amount that’s available in the market. Furthermore, this CFD trading decision does not particularly specify any minimum or maximum price in which the order needs to be filled. Instead, it gives instructions to the broker to secure the price that’s the lowest possible for that particular security. This is something that must be done as soon as possible.
What does “At the lowest possible price means?”
This phrase is mostly found in markets that have limited liquidity or those with low volume trading. The reason for this is that traders who are trading with illiquid securities tend to have fewer options when you execute a buy or sell order. In a thinly traded security, the market is limited and some parties demand prices that may be perfect for investors. For instance, those traders who prefer trading exotic currencies mostly use the words At the Lowest Possible Price.
Benefits of CFD Trading
When you take CFDs very seriously, you get to reap the benefits. Even though there are also risks that need to be considered, there are numerous ways to protect your capital.
Leverage
One of the things that attract many investors to CFD trading is leverage. This is a very powerful tool that enables you to open trading positions without paying the full amount of the underlying asset. It mirrors your gains as well as your losses.
Going Short
You can take advantage of the market either way, whether the market goes up or down. CFD is a form of trading that’s so flexible, more than any other form of trading.
Different Markets
In CFD, you can’t just trade currency pairs like in Forex trading. You can trade in 17,000 markets which include options, cryptocurrencies, commodities, indices, and shares. You can trade multiple assets in one account. No need to transfer from one account to another.
Not Owning the Underlying Asset
There are a couple of benefits that you get to enjoy when you trade CFDs. One of these is not owning the underlying asset. You may think that this is just a pure disadvantage but in reality, you get exempted from paying some taxes like stamp duty. You can trade the full amount of the asset, reap the profits if the market goes towards your predictions without owning the underlying asset.
Direct Market Access (DMA)
Direct Market Access is highly beneficial for advanced traders. DMA allows you to interact with forex providers and order books related to stocks and exchanges. When you trade with DMA, you get charged by commission. Though this can be a very powerful tool, there is still no guarantee that you can find the best available prices that are better compared to the previous ones. You must also not use it if you are new to the market. DMA is highly recommended for experienced traders only.
