Here we have compiled a list of commonly used terms in CFD trading
Leverage:
Leverage increases your purchasing power hence enables you to gain a large
exposure to a financial market while only tying up a relatively small amount of
your capital.
CFDs are leveraged, which means you only have to put down a small deposit for
much larger exposure.
Leverage increases your profit potential and the risk of losing your capital.
WorldTradeCenter CFDs have static leverage that depends on the Asset you’re
trading.
Margin:
When trading on leverage, you must maintain a certain level of funds in your
account (the necessary margin), also known as a good faith deposit. Calculating
and understanding your necessary margin requirements beforehand allows you to
apply good risk management and avoid any unnecessary margin calls resulting in
the closing of a position due to not enough margin in your account.
The margin of WorldTradeCenter’s trading platforms will be the invested amount
you select prior to opening the position.
Margin Call:
Margin Call refers to the situation where the broker asks for additional funds
to cover losses from your loss-making positions. Failure to meet margin calls
will lead to the automatic closing of your positions.
There are no margin calls when trading CFDs with WorldTradeCenter but your
position will automatically be closed when the price reached the stop loss
level.
Is Leveraged Trading Risky?
Even though you only put up a relatively small amount of capital to open a
position (initial margin), your profit or loss is based on the full value of
the position (Invested Amount * Leverage). So the amount you gain or lose might
seem very high in relation to the sum you’ve invested. However, it should
always be kept in mind that leverage not only magnifies your potential profits
but also your potential losses. Additional information about the maximum loss
or gain from each position can be found below.
Trading Profit and Loss Calculation:
Pip value: is an important component
of the P&L calculation and will be given to you by the platform prior to
opening your position.
Formulas:
Pip value for currencies (other than JPY) = (invested amount * Leverage) / open
price / 10,000
Pip value for currencies where JPY is the quoted currency = (invested amount *
Leverage) / open price / 10,000
Pip value for Equities and Commodities = (invested amount * Leverage) / open
price / 100
Note that the pip value given by the platform is the base currency of your
account.
Profit and Loss Formula = (pips movement * pip value) – swap charges
Pending Orders:
You can set pending/future orders for entering into a position when the actual
price will reach your target/set price.
Buy Limit: an order to buy at a specific price that is lower than the current
one.
Sell Limit: an order to sell at a
specific price that is higher than the current one.
Note that there are restrictions of how close your pending order price could be
to the current price
Take profit: is a pending order at a
predetermined price to exit a profit-making position.
You can set or change your take profit price (or amount) at the start or/and
during the period of your position.
We recommend checking the take profit price prior to opening a position.
Note that there is a limit on the range between the open price and the take
profit price.
Example:
You open a SELL position on EURUSD at 1.1208 with an invested amount of 100 EUR.
The pip value will be 3.5688 EUR and the take profit will automatically be set
at 1.118 so if the price reached the take profit you will win 100 EUR (3.5688 *
28pips ≈ 100 EUR).
If you wish to decrease the take profit level further at 1.11 then the
potential gain of your position will increase to (3.5688 * 108) 385.4 EUR.
Stop loss: is a pending order at a
predetermined price to exit a loss-making position.
You can set or change your take stop-loss price (or amount) at the start or/and
during the period of your position.
We recommend checking the stop-loss price prior to opening a position.
If you change the initial stop loss level your invested amount (margin) will
change also but the pip value will remain the same.
Note that there is a limit on the range between the open price and the
stop-loss price.
Example:
You open a SELL position on EURUSD at 1.1208 with an invested amount of 100 EUR.
The pip value will be 3.5688 EUR and the stop loss will automatically be set at
1.1236 so if the price reached the stop loss you will only lose your invested
amount (3.5688 * 28pips ≈ 100 EUR).
If you wish to increase the stop loss further at 1.1250 then the risk of your
position will increase to (3.5688 * 42) 150 EUR meaning that your invested
amount (margin) will automatically go to 150 EUR.
Close Manually: you can close your
open positions manually by pressing the close button on the right side of your
open trades section.
Trading Costs:
Spread is the difference between the
bid (sell) and ask (buy) price. The difference is presented in pips and
reflects the cost of opening a position.
The related cost will be spread * pip value.
Swap is the interest deducted from
the Profit/Loss of your position and is only charged when a position is held
open overnight.
Swap charge formula: swap rate * lot
size * the number of days.
Risk Warning: Trading in financial instruments using financial facilities, such as forward rate agreements, contracts for difference or virtual currencies involves a high level of risk, including the risk of losing all of the trading capital, and trading may not be suitable for all persons. Financial facilities, stock price volatility, and other financial instruments can work in your favour, but they can also work against you. Before you decide to start trading, you should carefully consider your investment objectives, the level of experience you have, and the degree of risk you can accept. We will not take into account your personal circumstances, nor make any recommendation for you to undertake any trading. In the event of uncertainty, you should consult and receive advice from specialist experts outside the Platform, including legal, tax and financial advisors.
Trading with us is subject to our Terms and Conditions and Privacy Policy, including modifications made from time to time. When you open an account on our platform, you accept the said documents and acknowledge that it is a legally binding contract for you duly.
Worldtradecenter is a global brand committed to providing an environment in which you can trade stocks and other financial instruments. If you have any questions, you can always contact our support team via email: support@world-trade-center.io.
Risk Disclaimer
CFDs are complex instruments and involve a high risk of losing money quickly due to the financial facilities.
You should consider whether you understand how CFDs work and whether you can take the high risk of losing your money. The Company is the counter party in your transactions and therefore is the seller when you are buying and the buyer when you are selling.
We highly recommend not investing more money than you can afford to lose to avoid major financial problems in case of losses.
Please be sure to determine the maximum acceptable risk for yourself.
Please be aware that Worldtradecenter is not responsible for the results of your CFD trading. You are solely responsible for your profits or losses. No market information or any educational or analytical material should be considered as trading advice setting out your trading actions, it is only non-binding market information.
Please be aware that Worldtradecenter will not be liable for any errors in quotes and software errors of the trading platform.
We apologize for not accepting traders based in the United States, Cuba, Democratic People’s Republic of Korea (North Korea), Iran and Syria on our platform, and may refuse to accept traders from any other countries at our sole discretion.