CFDs in 2022 and beyond: How has this market changed, and what does it mean for the trader?

Has the war between Russia and Ukraine required you to conduct in a different manner? Has it affected business?

The conflict between Russia and Ukraine is political, and I’m personally not into politics. At Squared Financial, we don’t like to be opportunistic, especially when it comes to conflicts, war, and humanity. We always adhere to take regulations in every market we are present in very seriously, and conduct-wise, we have ensured that we have followed all regulatory directives on how to deal with clients from Russia. It goes without saying that this conflict has created more market volatility, and we cannot deny it; clients’ portfolios, as well as their trading habits, have been affected. We pride ourselves on being our clients’ partner, and in doing that, we make sure we help our clients in all the ways possible to manage their risks and keep them updated on any impactful market news so that they can make the best decision possible to manage their positions and accounts.

How do you minimize risk in trading online? What do you, as a leading brokerage brand, do in order to promote responsible trading?

Where do I start? There are so many ways, but it all starts with educating and helping clients understand markets and encouraging them to learn how to trade them. We offer inexperienced traders the opportunity to open demo accounts to practice their trading strategies before starting with money at risk in live market conditions. We offer our clients a wide range of tradable assets so they can diversify their portfolios and manage their trading. We provide them with high-tech infrastructure and state-of-the-art platforms to support and secure their activities and make it easier for them to access data, information, accounts, and funds. We invest a lot in technology to give an average trader the same access that a professional and institutional trader has.

Why should one even invest in CFDs? How is investing in CFDs better than other types of investing, such as the stock market and real estate?

Not better, but let’s say different. Trading CFDs is like any other investment that has higher risks with a higher possible return. We always encourage clients to diversify their trading, and this is why we offer multi-asset trading including ETFs, shares, and more. As a trader, you should not stick to one asset, and your portfolio should not only consist of CFDs, but don’t disregard them to maximize your profit and loss (PnL), especially if the risks and losses are controlled and well understood. Moreover, if you want to increase your profitability on a certain stock or instrument you have an eye on, you can always trade it in a CFD format, so you are in effect trading a larger position with the same amount of equity, i.e. leverage. This allows for a bigger upside if your view is correct, but, conversely, higher risk should your view be wrong.

Take us a bit into the works – what are the most popular assets at SquaredFinancial today? Why do you think it’s so popular?

From our clients’ perspective and their trading volume, our top assets remain the traditional asset classes including EURUSD, Dow Jones, oil, gold, and DAX. But more recently we have seen a significant increase in interest to trade shares, cryptos, and ETFs, and this shows that our clients are increasingly becoming more sophisticated in trading, and increasingly aware of the importance of portfolio diversification. I personally like to trade assets that reflect my beliefs and financial needs. For instance, I’m a believer in green energy, and a fan of Artificial Intelligence, cyber security, technology, and crypto, so a big portion of my portfolio is based around these assets.

It’s not uncommon to hear investors complain about their brokers’ poor support. What is your vision of customer service, and how are you manifesting it?

It is a tough market, and people work very hard to earn money. However, some inexperienced traders tend to blame their broker in the case of loss. I’m not saying that they are not right in some cases, as it is the broker’s duty to protect clients, help them understand the risks, and educate them. If brokers don’t do their job in terms of education and security, then yes, the blame falls partially on them. On the other hand, retail investors should be aware of scams. They should do their due diligence to know whom they are entrusting their money with and make sure they know where their money is being traded and what they are trading to avoid such situations.

In your experience, what is people’s most common misconception of CFD trading?

Scams, unfortunately. I’ve been in this industry for more than 15 years and I’ve witnessed at first hand many changes. Many institutions are targeting uneducated people, clients who have no experience in trading and investing, enticing them with get-rich-quick schemes. This is what I want people to be aware of. Trading is not about making easy money, and there’s no investment growth without risk. Some financial institutions that call themselves brokers contact you out of nowhere and try to convince you into investing in CFDs to make money. CFDs are complex financial assets that you need to learn and educate yourself about before you trade. You also need to know whether you can afford potential losses, psychologically and financially.

Trading cryptocurrency CFDs is usually considered a viable option only for experienced traders. Do you agree? Why?

It’s recommended to trade both, actual cryptos and crypto CFDs. For longer-term investments, actual cryptos unmargined for speculation would make a good choice, while CFDs can be chosen for the shorter term. However, investors should keep in mind that cryptos are very volatile assets, and with an added margin, they become even riskier, so they have to be very careful when trading crypto CFDs.

What traits are important for an investor to have in order to maximize their potential in the CFD markets?

Education comes first. It’s not a trait but rather an essential pre-requisite in my view. Educate yourself and understand the markets. Understand your profile and risks and set your investment goals. You should also set a proper investment strategy from the outset. 

Diversification comes next as it helps you minimize your losses. Don’t stick to one asset type, because markets are full of surprises, and you don’t want to be caught out by having a highly correlated portfolio should markets move against you.  

What you shouldn’t be is greedy. Know when you are wrong and be disciplined with setting stop losses and taking profit. Be patient, trading is a long journey with many learning experiences and opportunities along the way.