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Everything You Need to Consider for IG CFD Trading

Oct 21, 2021CFD Trading0 comments

Are you thinking of using IG for CFD trading?

CFD trading is a financial product that enables traders to predict price movements based on the short-term. Trading CFD has some benefits attached to it, which include that you can trade on margin. Plus, if you think the price will go down, you can sell or go short, whereas going long or buy if you think the price will rise.

There are many forex brokers you can trade CFD on, and one of these includes the prestigious broker IG. Thus, in this article, we’ll be looking at everything you need to consider before trading CFD on IG.

Now, let’s delve into it!

Part 1: What is IG CFD trading, and why should we trade with IG?

IG CFD trading means that a trader can speculate on if the price of an asset will rise or drop without actually owning the asset. A trader can only open a position by making a deposit that is a specific percentage of the total price of the asset. This reason, in turn, provides benefits as well as potential trading risks. Make sure you know the fundamentals of CFD trading. Here’s a reason why you should trade CFD on IG :

  • It plays a vital role in risk management. It helps reduce loss with an extensive range of stops and limits.
  • Provides support. It provides around-the-clock assistance from 8 am on Saturday to 10 pm Friday (BST).
  • Open a position from any platform. It gives you the leverage to open a position on an award-winning web-based platform and mobile trading app.
  • Utilize your Capital with leverage. Pay a fraction of the total cost with IG CFD margin to open a position
  • Stay alert Make use of custom price alerts to react to breaking news.
  • Get free courses. Leverage IG’s trading courses on IG academy to become a better trader.

Part 2: What are the benefits of IG CFD trading?

CFD trading on IG has the following benefits attached to it:

  • 1. IG Leverage

CFDs help your capital go further, as all you have to do is deposit a fraction of the full value of your trade to open a position. The deposit is referred to as “margin.” The amount you need to deposit is dependent on the position size and the margin of the chosen market.

IG leverage

  • 2. IG Going short or sell

Since CFD trading includes an agreement to exchange the difference between your position’s opening price and closing price, it is more flexible than other forms of trading. It allows you to trade in both falling and rising markets.

When you trade CFDs on the trading platform, you will see two prices listed: the bid price and the asking price. If you believe that the market price will rise, you will trade at the buying price, and if you think the market price will fall, you will trade at the selling price.

  • 3. IG Trade a vast range of markets

You can use CFDs to trade more than 17,000 markets, including stocks, indices, commodities, foreign exchange, cryptocurrencies, options, and more. And you don’t have to visit multiple platforms to trade different markets. With just one login, you can use everything wherever you need it.

You can even trade certain markets outside of trading hours to take full advantage of company announcements. Please keep in mind that the market’s opening price may differ from its non-business hour’s price.

  • 4. IG Similar to the underlying market

CFDs are designed to simulate the trading environment of their underlying market closely. However, when trading stock CFDs, your position will get adjusted to offset the impact of any dividend payments, and you will not receive shareholder privileges.

At the same time, buying or selling foreign exchange CFDs is equivalent to selling the same amount of quoted currency and buying a certain amount of base currency.

  • 5. IG Hedging your share portfolio

For example, suppose you own some shares in HSBC and plan to hold your shares for a long time. You think the banking industry may be a downturn, and you want to use CFDs to offset any potential losses. So you unlock a short position.

If you are right and your HSBC shares fall in value, your CFD position will bring you profits and offset your losses. If the value of your HSBC stock increases, you can close your CFD position.

hedging share

DMA

You can get access to the direct market if you’re an advanced trader. This enables you to communicate with the order books of stock exchanges and forex providers. You can trade at a market price of your choice instead of trading at the price to buy and sell offered by IG.

When you choose to use DMA to trade, because there’s no IG spread to pay, you can trade DMA charged via commission.

Part 3: How to do IG CFD trading?

When trading CFDs, you go long or buy a certain number of contracts on a market that you expect the price to rise and go short or sell if you expect it to fall.

Here’s a six-step guide on how to start trading CFD

Step 1: Learn how to trade CFDs

First, you must understand the working principle of CFDs by getting involved in free online courses through IG academy.

Step 2: Create and fund an account

Apply for an IG CFD account which takes few minutes to complete, then provide the necessary details for verification. After verifying, you’ll have to fund your account.

Step 3: Formulate a trading plan

Now, you need to plan your trading strategy to beat the distractions of pressure or stress of decision-making.

Step 4: Find an opportunity

It’s time to find your first trade seeing you have opened and funded your account. Now you can start trading on one of the over 17,000 IG markets, which includes: indices, shares, Forex, commodities, and cryptocurrencies.

Step 5: Select a platform for your CFD trading

With IG, you can access different trading platforms like IG MT4, Web-based platform, Mobile trading app, and advanced platform.

Step 6: Open, monitor, and close your position

When you decide which market to trade in, you are ready. The first thing to decide is whether to go long or short. For example, suppose you want to trade FTSE CFD on IG. If you think its value will descend, you sell (“short”); if you think it will rise, you will buy (“long”). Being able to choose to do either is one of the main benefits of CFD trading.

Once you establish a position, your profit and loss will be consistent with the underlying market price. You can monitor all open positions on the trading platform and close them by clicking the “Close” button. You can also do this action manually by putting the same transaction you originally placed in the opposite direction (unless you force a new position to open). Therefore, if you open a position by buying, you can close it by selling the same number of contracts at the selling price and vice versa.

Your gain or loss is calculated by multiplying the market moved by the size of your trade-in pounds per point. Here’s an illustrated case in point of how this works:  

open, monitor and close

Part 4: A Detailed Guide on IG CFD Margin

CFD trading signals are actionable suggestions to buy and sell based on analysis, whether technical or fundamentals. You can prefer that CFD signals be sent to you directly as opportunities arise in the selected markets; this helps to make decisions in trading. 

Margin trading allows you to fully participate in the market with only a small part of the funds you usually need.

Margin is the amount you need to open a position, defined by the margin rate.
CFDs are leveraged products, and you can trade without paying the full value of your risk exposure. Instead, you only need to invest a small portion of your total exposure in opening a position.

There are two ways of margin to consider:

  • Initial margin

The initial margin is the min amount you need to open a position. It is sometimes called a deposit margin or simply a deposit.

  • Maintenance margin

Maintenance margin, also known as variation margin, is the additional funds we may need to ask you when your position is not good for you. Its purpose is to ensure that there are enough funds in your account to fund the present value of the position at any time to make up for any operating losses.

IG CFD Margin:

At IG, competitive margins are available across markets. They operate a tiered bargaining policy on all markets except on digital 100s. And they offer a lower margin rate.

Part 5: All You Need to know about IG CFD interest rate

At a specified date in the nearest future, all contracts expire. IG quotes their bid spread based on the underlying rate. IG offers a lower interest rate version for future contracts of 20% of the main contract size and required margin.

Along with these terms, let’s know about some essential information shortly regarding the IG broker platform:

Q1: Is IG safe?

IG is considered secure as it is under the authorization of the Financial Conduct Authority (FCA) and the Federal Financial Supervisory Authority (BaFin). It maintains itself under the London Stock Exchange.

Q2: IHow about the customer service of IG?

IG customer service support provides contact options, like email, live chat, and phone support, providing customers relevant answers. It doesn’t offer 24/7 customer support. Email provides quick answers, but phone support can be slow. Live chats are maximum times offline.

Q3: IWhat types of instruments does IG provide?

IG offers several trading instruments to its clients such as Commodities, Forex, Cryptocurrencies, Shares, Futures trading, and Spot trading.

Q4: ISpread IG:

The spreads at IG start at 0.6 pips on major currency pairs on Forex. On commodities like Spot Gold provides spreads as low as 0.3 pips. The spread of FTSE 100 starts at 1 point.

Q5: IMargin IG:

The minimum margin of IG is 0.45%. The average margin starts from 3.33% to 50%.

Q6: IDeposit fee:

The minimum initial deposit requirement of IG is 20,000 Dirham, both for the card and bank transfer. For card payment, the minimum amount is $300.

Q7: IDeposit and withdrawal requirements:

IG provides clients free deposits and withdrawals, including a wide range of options for funding an account. It offers traditional methods, including PayPal, bank wire transfer, and credit card funding.

Q8: ILeverage of IG

Instruments on IG like Forex, indices, and commodities (Spot Gold) have 200:1 leverage. IG offers low leverage of 50:1 on several instruments.

Q9: IWhat are the trading platforms IG offers?

IG ensures its great trading experience through its multiple trading platforms. The trading platforms include MetaTrader 4, Mobile trading, Algorithmic trading, ProRealTime, Trading signals, Trading alerts, and API interfaces.

Q10: How many active clients have chosen IG?

IG has reported that around 313,300 active users are using IG worldwide.

Part 6: A Detailed Comparison Chart Of Top 5 CFD Trading Platforms

Here’s a detailed equivalence chart of the top 5 CFD trading platforms in various categories

Stock Trading Platforms Overall Rating Account opening Trading platform Deposit & Withdrawal Market or Products Regulators Research Customer Services
CMC 4.3 1-3 days Web-based, Mobile and Desktop Free Forex, CFD, Stocks, cryptocurrency, copy-trading, spread betting ASIC, IIROC, MAS, FCA, FMA, CFTC/NFA User-friendly research tool Not available 24/7
Phone support available
IG 4.8 1-3 days MT4, proprietary, Desktop, Web, copy-trading Free except for international withdrawal Forex, CFD, Forex pair, stocks, cryptocurrency, copy-trading ASIC, FCA, BMA, FSCA, MAS, NFA, CYSEC Useful research tool Not available 24/7
Phone support, Live chat, Email Support available
eToro 3.8 1 day Mobile trading, one-click trading Free Forex, CFD, Indices, Gold and Silver, cryptocurrency, Stocks, Metals, ETF, Commodities FCA, CYSEC, MiFID, ASIC Limited research option Not available 24/7, Fast and responsive, Live Chat
Plus500 4.0 1 day Browser-based, Trailing stop, pending order Free deposit but withdrawal fee applies Forex, CFD, Indices, Spread betting, Gold and Silver, Cryptocurrency, Stocks, Oil, Metal, ETF, Energies, Options ASIC, FSCA, MAS, CYSEC, ISA Good Technical analysis tool Available 24/7
Live Chat, Email support available
Oanda 3.7 1-3 days Pending order Free Forex, CFD, Gold and Silver CFTC/NFA, FCA, FSA, FSC, SIBA, MFSA Wide range of research tool Not available 24/7, phone support, Live Chat

Conclusion

Now we have entirely covered everything you need to put into consideration regarding IG CFD leverage.  Besides, you also need to know IG marked CFD commission and fees to help you choose your preferred platform to trade CFD.

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