CFD trading prognosis for 2021
CFD stands for Contract for Difference and it is used by traders to speculate the difference between the current value of an asset and its value at a certain moment in time. If it is positive, the buying side profits and if not, the seller comes out on top. Think of it as a form of gambling.
But is CFD trading worth the risk and what is its prognosis for 2021? To find our answers, we need to asses a number of factors.
There is no standard answer to the risk element. Traders can certainly put some serious assets on it, however as with any form of trading, whether a beginner or an experienced trader, a full assessment of the market is essential.
When it comes to CFD trading, it is a market that has grown over the last 10 years and has gained popularity amongst traders looking to make short term investments with low initial capital.
Around 2019, a lot of investors came to the vision that CFDs were a powerful trading alternative. In 2020, that vision grew further and expectations for 2021 are hugely optimistic. However, an aspect that needs careful consideration before trading CFDs is what assets you want to speculate with.
When it comes to negative trends, it is always important to expect the unexpected. As an example, US President Donald Trump’s comment on interest rates in 2018 had a negative impact on the market and prompted an extreme selling wave. This reemphasised to traders the importance of analysing the market in real time.
There are a number of other factors to consider revolving around current world events.
The most is the current global health crises and there are a number prognosis regarding how it could play out in 2021. The more optimistic forecast a world which is relatively back to normal by June, with a variety of vaccines currently being rolled out globally. However, sceptics are quick to highlight any new strains of the virus could easily make the current vaccine ineffective, thus placing the world back a number of steps. Either way, the pandemic will have a large impact on CFD trading.
An area that traders are being drawn to currently is Cryptocurrency. Bitcoin has seen record highs in 2020, which are forecast to continue right through to the end of 2021. This has been one of the biggest trading stories in the main stream media over recent years and Cryptocurrency looks to be here to stay.
Uranium stock also needs to be kept a close eye on. Cameco went up 40% in December 2020 for example and a number of smaller producers are also expected to grow in 2021.
It is clear 2021 will give us answers which will not only shape CFD trading this year, but for many years to come. It is clear CFDs are going to go from strength to strength, with convenient risk management and automated trading using CFD, traders will do well if the correct strategies are implemented effectively.
