CFDs are an excellent substitute for conventional investments. Easy to use but profitable tools for short and long term investments. A CFD or Contract for Difference is a transaction between the trader and the dealing desk, paying the difference in value between the current value of the asset and its value at the time of expiry or closure of that contract.

In the case of share CFDs, they do not have an expiry date (unlike futures CFDs) and, moreover, the possibility of closing the contract only the trader may do so unilaterally, this is another important advantage. The purchase of a CFD on a share does not involve the physical holding of the share. Thus, by buying a CFD you do not become a shareholder in the company. 

How do I trade with CFDs?

A CFD is a derivative instrument, the value of which varies according to the underlying instrument. It is entirely speculative and was created for this very purpose, as an opportunity to work with a small deposit.

Trading platform capabilities for trading CFDs in Malaysia? 

Most traders using a CFD trading platform are able to trade the following asset groups:

  • Currencies. Foreign Exchange market instruments such as Euro/Dollar, Yen/Dollar, etc.
  • Bonds. Bonds are debt securities that give their holder the right to receive (on a specified date) the nominal value of the asset from the issuer.
  • Commodities. Gold, oil, platinum, etc.
  • Shares. Gives the opportunity to earn on dividends or price changes.
  • Indices. Is a special financial instrument that describes a certain area of the economy of a certain region.

When an investor opens a position in a CFD trading platform, he specifies the amount and direction of the deal - rise or fall. To put it simply, if an investor thinks that the price of the chosen market will go up, he buys the asset, and vice versa, he sells it. And if the prediction turns out to be correct, profits will increase in line with the increase in that price.

Best online trading
Best online trading

Advantages of CFD on the trading platform

Higher leverage. A CFD trading platform provides a higher level of leverage than traditional stock trading. 

Access to Global Markets. The CFD trading platform provides access to all the major markets of the world, so you can trade around the clock.

Low entry threshold. Trading equities requires a fairly high initial investment. Many brokers also set limits on the amount of available balance that must be in an account. The CFD market is not subject to these restrictions. You may trade with as little as $100 on the deposit, the minimum deal may start from USD 1, even if the asset itself costs USD 1000 - the profit will be proportional to the price change.

Variety of trading possibilities. Currently, the CFD trading platform offers stock, index, treasury, currency, sector and commodity CFDs, so speculators have extreme freedom in choosing which instruments to trade.

Tax efficiency. Unlike conventional stock trading, transactions in CFD trading platforms do not involve a change in ownership, so traders do not have to pay standard tax. You can pay your own taxes on the profits earned from financial activities if you wish.

Flexibility. Trading on the CFD trading platform is equally effective in rising and falling markets.

The drawbacks of CFDs on the trading platform

Paying the spread. Although the CFD trading platform offers a worthy substitute for the usual markets, it has a significant drawback. The trader has to pay the spread. But the spread is still considerably lower than the commissions when buying shares. The bigger the value of the company, the bigger the spread. 

Investing on a CFD trading platform in Malaysia is not convenient for all traders. If little capital is available, CFDs are a suitable option. However, if finances are not an issue, traders are better off considering futures and options trading.

Technical analysis is used to evaluate investments and identify trading opportunities in price trends and patterns displayed on charts. Technical analysis is often used to generate short-term trading signals from various charting tools. There are hundreds of patterns and signals that have been developed by researchers to support trading using technical analysis. 

Some indicators focus primarily on determining the current market trend, including support and resistance areas, while others focus on determining the strength of the trend and the likelihood of its continuation. Commonly used technical indicators and chart patterns include trend lines, channels, moving averages and momentum indicators. 

Choose stocks for investment
Choose stocks for investment

In general, the following types of indicators are considered on the CFD trading platform:

  • Price trends.
  • Chart patterns.
  • Volume and momentum indicators.
  • Oscillators .
  • Moving averages.
  • Support and resistance levels.

When analysing a security, traders often use various technical indicators. Traders should choose the indicators that suit them best and learn how they work. Traders can also combine indicators with other technical analysis techniques, such as the study of chart patterns, to create trading strategies. 

How to make money trading CFDs in Malaysia? 

The price of an asset always changes only in two directions - either up or down. This specifics of how the market system works is based on the law of supply and demand. The balance of these two factors in a certain period of time influences the direction of the price movement in one way or another.

All efforts expended by traders are aimed at competent and correct forecasting of price changes of the analyzed asset at a certain period of time. The purpose of such actions is the desire to receive a speculative profit, at that, dynamically increasing. 

This logic is the basic principle of trading in all markets, including the best trading platform CFD in Malaysia. Try it and it will work out for you!

Commodity trading
Commodity trading

There is a wide enough range of trading strategies to achieve a high index of trades, which determines the profitability and risk factors. 

The simplest strategies on the CFD trading platform can be: 

  • Short (sell) - this is the simplest strategy among all the others for trading CFDs. The trader takes a 'short position' by opening a deal to sell the asset at a certain price. In this case, the speculator earns a profit if in the next certain period of time the price of the trading instrument became lower than at the time of opening the transaction.
  • Long (buy) - a tactic that technically performs the same operation as a short sell, only with the objective of increasing the price of the asset.

In general, there is no expiration date for either short or long position, but technically each such long position requires a monthly rollover and adequate money management. 

  • Pair trading - this approach consists of simultaneously buying CFDs on one asset while selling another, and such instruments must be close in psychology and nature of movement. As prices of the chosen assets are influenced by the same factors, in this case a trader reduces the risks significantly. Simply put, if a trader loses a position on one contact, he/she can make a profit on the second one, due to the fact that the price movements of both assets may be different. The use of the calendar spread, when a speculator enters into offsetting transactions for the same asset, but in different months, may be just as relevant.
  • Hedging - in many cases, the CFD market is used by traders to hedge open market transactions. In such cases it is necessary to open an oppositely directed position which gives an opportunity to close a part of a deal or to cover it completely with an opposite position. Such operations are usually performed in situations of increased risk.

Working on the best CFD trading platform in Malaysia is interesting both to beginners and experienced traders. Key CFD trading strategies give you the opportunity to profit from asset price movements with a small initial deposit and no holding. This experience will be very useful in learning and preparing for trading.

How to start CFD trading in Malaysia? 

When deciding on a CFD trading platform in Malaysia, it is worthwhile for every trader to carefully consider all the pros and cons. If the difference is substantial, the risk is worth it and CFDs will provide a winning way to trade. 

The current trend in the stock market is to learn how to trade CFDs in Malaysia through online platforms. The internet is becoming a popular tool for traders and entrepreneurs due to the growing entrepreneurial opportunities.

Registration on the platform
Registration on the platform

The only thing required from the trader is to open a brokerage account on the CFD trading platform. You don't even have to leave home to register and fund your account. Fill in your account details before you upload your verification documents such as name and email address. Once you have registered and verified your account details, you can proceed to transfer funds to your approved trading account using one of the payment methods provided. Now you can start trading in the stock market. Go ahead, have fun trading!

In the CFD trading platform you can make a deposit using leverage. Using leverage allows you to borrow money from your broker and trade more money than you have on your deposit. In turn, this gives you an opportunity to make a significant profit or a noticeable loss if the price moves against the open position. Some brokers offer leverage of 1:20, 1:50, 1:100 or 1:500 and some even 1:1000.

The amount of leverage has no effect on your risk exposure. It only depends on the volume of positions opened by a trader. Generally speaking, the leverage offered by brokers is an opportunity to earn with the smallest of deposits.

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

On the CFD trading platform in Malaysia you have an opportunity to try trading without worrying about your own savings. This is possible by opening a demo account on the trading platform. You do not need to turn down the opportunity to try your hand at a demo account. This will allow you to try trading with virtual dollars. 

Do not trade with the money you need to live or pay your bills. This is the first step to big failure. Be systematic and don't get carried away. Stick to your strategy and control your risk. Being a trader on the best CFD trading platform in Malaysia is hard work, but very profitable. It requires time and a lot of patience. We wish you a successful investment. Give it a try and you are sure to succeed!

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