Global trading opportunities
CFD trading doesn’t require the trader to buy and sell any underlying assets. When trading CFDs, you agree to exchange the difference in the price of an asset from the point at which the contract is opened to when it is closed. One of the advantages of CFD trading is that traders use price movements in either direction, without having to take ownership of the underlying assets. The profit or loss one makes depends on the extent to which the forecast is correct.
With Scope Markets you can trade global markets and various financial instruments on Forex, Shares, Metals, Indices and Spot Energies.
CFDs are leveraged products, which requires traders to deposit a small percentage of the full value of the trade in order to open a position. This is called “trading on margin” (or margin requirement). While trading on margin could increase returns, losses can be as significant as they are based on the full value of the CFD position.
Using Leverage when trading in CFDs can deliver enhanced return for traders, but at the same time can lead traders to losing their whole invested capital. For this reason, traders should only invest the amount that can afford to lose.
Let’s assume you buy 100 CFD contract on Scope Markets for L'Oreal SA (ORFR) shares at $98 per share. A CFD contract on L'Oreal SA consists of 1 share. Now L'Oreal SA shares go up to $100 and you close your position. Your profit is (100-98)*100 = $200.
Let’s assume you sell 100 CFD contact on Scope Markets for Siemens AG (SIEDE) shares at $100 per share. The CFD contract is the same as previous example. Now Siemens AG shares go down to $95 and you close your position. Your profit is (100-95)*100 = $500.
Forex trading is buying or selling one country’s currency in exchange for another. With a trading volume of $3 trillion per day, forex market is one of the most liquid markets in the world with the US dollar (USD) is the most popular and traded currency.
The Forex market is open 24/5 and prices are influenced by different economic and geopolitical factors, which can trigger quick price movements and increase market volatility.
CFDs on FX are leveraged products. That is to say your broker will essentially lend you a multiple of the amount deposited in your trading account. For example, 1:30 Leverage means that for every $1 deposited in your trading account, your broker lends you $30. Deposit $10,000 in your trading account and with the 1:30 leverage you would effectively be able to open $300,000 worth of trades. While leverage can serve to multiply trading results, judicious use is always advised as leverage can also multiply losses.
Forex trading consists of the relative movement of the exchange rate between two currencies. Trades are taken in pairs, for example, the EUR/USD (Euro vs. United States Dollar). Price quotes are displayed as the exchange rate for these two currencies. For example, you might see a price displayed as: EURUSD - 1.05000 The indicates that 1 EUR is worth 1.05000 USD.
Scope Markets is a 5-digit broker, so all prices are quoted to the 5th digit, allowing for fractional pricing and tighter spreads. In our EURUSD example, the first currency (EUR) in the pair is known as the Base Currency. The second currency in the pair (USD) is known as the Quote Currency.
Forex currencies are traded in what we term Lots. A Standard Lot is equivalent to 100,000 units of the base currency and the equivalent amount in the quote currency.
Let’s illustrate this with a continuation of our EURUSD example. Further, let's assume the account is in US dollars. The price for the pair was 1.05000. If we believe the EUR will appreciate in value against the USD, we will enter a BUY trade. If we BUY 1 Lot of EURUSD we now "own" 100,000 EUR and owe the market 105,000 USD. Our Buy prediction was accurate, and the EUR increases in value and the rate is now 1.07000. To close the trade, we would sell our 100,000 EUR for 107,000 USD, which would cover the amount we owe the market for a profit on the trade of 2,000 USD.
Conversely, if we believed the EUR would depreciate against the USD, we would SELL 1 lot of EUR at the 1.05000 price, resulting in us owing the market 100,000 EUR but owning 105,000 USD. Again, our prediction was correct, and the EUR does indeed depreciate against the USD, falling to 1.03000 giving us a profit for the trade of 2,000 USD.