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CFD overview

CFD overview

BlackPearlFX offers No Dealing Desk execution on CFDs through MetaTrader4 and FIX API connection.

What is CFDs trading?

Clients can use CFDs to speculate on the future movement of market prices regardless of whether the underlying markets are rising or falling. As with traditional dealing, CFD prices are quoted as a buy (“offer” the price you go long at) or sell (“bid” the price you short sell at).The price of your CFD replicates the price of the underlying instrument and you are charged a small commission for each equity trade that you place with us.

What is CFD Trading Leverage?

Unlike traditional dealing, CFD trading enables you to trade the markets by paying just a small fraction of the total trade value. The idea of trading on a margin is that the trader only pays a percentage of the quoted share price. A CFD company advertises a rate and so the trader is required to have a much smaller amount of money to start off with them if he was trading live on the share market. This means that as little as 1% of the overall price of the shares is required as an initial payment on the contract if the broker is offering clients 100:1 leverage. CFDs do not require the investor to purchase the underlying asset: therefore the CFD trader can hold positions much greater that would be possible in standard investments by only having to deposit a small fraction of the total trade value whilst maintaining a full exposure, clients can magnify their gains but ALSO their losses. As with all forms of financial trading, there is the potential to lose all or part of your investment. The risk key with leverage is that it can magnify your losses in exactly the same way as your gains.

Going Long and Shorting with CFDs

There 2 types of trading with CFDs: going long (buying) and going short (selling) A trader will open a long CFD position if he wants to buy shares which he expects to rise in value so that he can sell them at a later date and make a profit. In case the price of the shares goes down the trader will then incur a loss once he sells the shares at a lower price. A trader will open a short CFD position if he wants to trade shares which he expects to fall in value, with the difference between the opening and closing prices being counted as profit (or loss if the price goes in the opposite direction). Traders can choose to trade on indices or equity markets, the margins set by the BlackPearlFX is 1% of the deposit and leverage 100:1

An example of a CFD trade:

If you believe that the DAX (German index) will rise in value you can request a price using your BlackPearlFX Metatrader platform. The bid and ask prices are 10455.8 – 10456.8 and you decide to buy 1 CFD (Minimum amount that you are allowed to trade with BlackPearlFX) at 10456.8. 1 CFD is the equivalent of €1 per point movement of the index. If the price moves up to 10545.5 – 10546.5 and you want to sell at 10545.5, you would realize a 88.7 points profit (the realised profit is given by the price you sell 10545.5 minus the price you buy 10456.8). In this particular trader you would have realized a net profit of €88.7 (points 88.7 x 1 CFD). Always bear in mind that if the market had fallen in value you would have incurred a loss. So it is very important to always remember to speculate with money you can afford to lose; you may lose more than your original stake or deposit. Prices can move against you and resulting losses may oblige you to make further payments.

Another example of a trade on DAX is the following:

you believe that DAX will drop in value and you want to sell 1 CFD at 10455.8. Unfortunately the market goes in the other direction and after few hours you decide to close your position and buy the 1 CFD back at 10560.3 realising a loss of 104.5 points hence €104.5.

Institutional Clients

BlackPearlFX partners with some of the best Liquidity Providers in the CFDs industry in order to offer the best possible trading experience to its clients and also give the possibility to execute large CFDs orders with minimal slippage. BlackPearlFX also offers Liquidity and support to Institutional clients, thanks to PrimeXM’s technology bridge XCORE, that helps to handle multiple fills, large single ticket sizes with No Requotes and fast execution (with no broker intervention).

How commission applies to CFD trading

This is calculated based on the value of the live share, rather than from the margin rate. It is debited automatically from the traders ‘account, at the same time as the initial margin requirement. With BlackPearlFX all CFDs instruments include commission inside the spread and there is no extra charge. CFDs can be subject to overnight trading charges and you can find out about these charges on BlackPearlFX MT4 platform. Please ask a member of our Support team for further information if needed.

Why trade CFDs Indices?

Trading Indices offers access to a new range of markets, meaning you can diversify your trading strategies across uncorrelated instruments. CFDs profits are not exempt from UK Income Tax although CFDs losses can be offset against profits for tax deduction. Clients are able to set stop losses, take profits, stop orders, limit orders and also hedge their position when needed (hedging a position means going the opposite way to the original trade that is still open).

Margin requirement

BlackPearlFX offers to its clients a minimum margin requirement of 1%. This means that a trader that deposits 1,000$ in his trading account can open a maximum position of 1 lot (or 100,000$)

Risk of Slippage

First of all what is slippage? Slippage is when an order is filled/executed at a different price from the price requested by the trader. The slippage is something that happens very often especially in the OTC Markets when traders execute orders during market news or when there is a sudden move of the price. At BlackPearlFX we try very hard to make sure that all trades have no or minimal slippage at all times by offering a low latency execution (either via the MT4 platform or via FIX API) but we also want clients to understand that this is part of the game and slippage should be taken into account before executing a trade. 

Types of slippage are:

  • Positive Slippage; When the order is submitted and the best available price being offered suddenly changes (while the trader order is executing) in the trader's favor. For example the trader wants to buy 1 lot of DAX at 10455 but receives confirmation to have bought at 10454 (1€ cheaper than requested).
  • Negative Slippage; when the order is submitted and the best available price being offered suddenly changes (while the trader order is executing) against the trader. For example the trader wants to buy 1 lot of DAX at 10455 but receives confirmation to have bought at 10456 (1€ more expensive than requested).

What causes slippage?

When a trader is attempting to buy 1 lot of EURUSD at 1.1090, but there is no one willing to sell EURUSD at 1.1090, the trader's order will look at the next best available price and buy Euros against Dollars at a higher price than requested initially, in this case the trader will have a negative slippage (this process is generally done in few milliseconds). Some times the opposite could also happen and in this case the trader could have a positive slippage because on the other side there is one or more traders willing to sell EURUSD at a lower price than what the trader initially requested.

Monitoring your trades

At BlackPearlFX we always encourage clients to constantly monitor their open positions at all times and also use stop losses on every trade. CFDs Indices we offer include the DAX, SP500, HK50, and the ITA40 amongst many others. Find out instruments offered and spreads. Experience BlackPearlFX fast execution on CFDs today.

Leverage Risk Warning

Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. In fact due to the very nature of leveraged FX/CFD trading you could incur losses that are greater than the funds deposited with us.

You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Depending on your trading strategy whether manual, or an automated trading strategy, please ensure you test such a strategy initially in the demo environment. Past performance is no guarantee of future results. Trading conditions change constantly.

Leverage allows traders the ability to enter into a position worth many times the account value with a relatively small amount of money. This means that the investment you make with could be extinguished quickly and losses could possibly exceed your initial deposit. Market movements can be volatile and unpredictable. Leverage can therefore work to your advantage or against you. A decrease in liquidity would also mean that quotes may be unobtainable which would create further losses and we may decide to suspend trading. Gapping is another feature that can create losses and arises where there is a significant change to the price offered between quotes. Gapping may occur in fast and falling markets or if price sensitive news is released and prices increase with very strong momentum.

The Forex market offers traders the ability to use a high degree of leverage, trading with high leverage may increase the losses suffered.

REGULATION AND LICENCING

CFDs and Spot FX are leveraged products and carry a high degree of risk to your capital. It is possible to lose more than your initial investment so only speculate with money you can afford to lose. CFDs and Spot FX may not be suitable for all investors so please ensure you fully understand the risks involved, seeking independent advice if necessary. 

BlackPearlFX is a trading name of Black Pearl Securities Limited (Company number 08823678). Black Pearl Securities Limited is authorized and regulated by the Financial Conduct Authority, Financial Services Register Number 688456. Registered office address: 23 Austin Friars, London, EC2N 2QP. United Kingdom

Relationships listed throughout the website may be directly or indirectly established with Black Pearl Securities Limited or its trading name BlackPearlFX. The Entities listed include custodian banks, clearing partners, liquidity providers, technology providers, news & market data vendors, among others. Names and Logos of listed entities are the property of their respective owners. 

BlackPearlFX’s Payment and Foreign Currency Exchange Services are provided by Ebury Partners UK Limited. Ebury Partners UK Limited is authorised and regulated by the Financial Conduct Authority as an Authorised Payment Institution (Financial Services Register No. 522933).

The information on this site is not directed at residents of the United States, Japan, Afghanistan, Algeria, Angola, Bosnia and Herzegovina, Cuba,Guyana, Iran, Iraq, Lao PDR, Myanmar, North Korea, Papua New Guinea, Sudan, Syria, Uganda, Yemen or any particular country outside the United Kingdom and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law and regulation.

www.blackpearlfx.com is owned and operated by Black Pearl Securities Ltd.

Website Terms and Conditions | Risk Warning Notice | Customer Terms and Conditions

REGULATION AND LICENCING

CFDs and Spot FX are leveraged products and carry a high degree of risk to your capital. It is possible to lose more than your initial investment so only speculate with money you can afford to lose. CFDs and Spot FX may not be suitable for all investors so please ensure you fully understand the risks involved, seeking independent advice if necessary. 

BlackPearlFX is a trading name of Black Pearl Securities Limited (Company number 08823678). Black Pearl Securities Limited is authorized and regulated by the Financial Conduct Authority, Financial Services Register Number 688456. Registered office address: 36 Whitefriars Street, London, EC4Y 8BQ. United Kingdom

Relationships listed throughout the website may be directly or indirectly established with Black Pearl Securities Limited or its trading name BlackPearlFX. The Entities listed include custodian banks, clearing partners, liquidity providers, technology providers, news & market data vendors, among others. Names and Logos of listed entities are the property of their respective owners. 

BlackPearlEX’s Payment and Foreign Currency Exchange Services are provided by Ebury Partners UK Limited. Ebury Partners UK Limited is authorised and regulated by the Financial Conduct Authority as an Authorised Payment Institution (Financial Services Register No. 522933).

The information on this site is not directed at residents of the United States, Japan, Afghanistan, Algeria, Angola, Bosnia and Herzegovina, Cuba,Guyana, Iran, Iraq, Lao PDR, Myanmar, North Korea, Papua New Guinea, Sudan, Syria, Uganda, Yemen or any particular country outside the United Kingdom and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law and regulation.

www.blackpearlfx.com is owned and operated by Black Pearl Securities Ltd.

Website Terms and Conditions | Risk Warning Notice | Customer Terms and Conditions