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CFD Regulation and Range of Choice
CFDs are becoming more and more regulated around the world, just like all other financial instruments. Regulatory authorities do this in order to ensure there is competition in the marketplace, so that brokers keep on improving their services and that only reliable brokers will dominate in the marketplace.
CFDs are used by many types of traders, including hedgers, spot forex traders and even binary option traders, as part of their strategy. Even classic stock investors now use CFDs to do their short term trades. CFDs provide superior, protective liquidity, linear pricing and guaranteed stop loss orders. So traders will always want them. Currently, CFDs are available in most countries, there are only few countries where CFDs are banned, including the United States of America, and this puts traders and investors there at a tremendous disadvantage. Especially retail traders who cannot afford to use any other alternatives, such as Options or Futures. Options are very complicated and hard to use instruments, whereas Futures are non linear and more expensive. US banks have specialist traders who use Options and Futures, but small retail traders cannot really use these, and the ban on CFDs and possibly on binary options puts US traders at huge disadvantage.
Future of CFDs Regulation and New ways to Trade
CFDs will likely evolve further because of the necessity to reduce volatility on the new cryptocurrencies such as the popular Bitcoin. By allowing more and more CFD brokers to offer trading on these cryptocurrencies, volatility will be reduced and the entire cryptocurrency market will become more stable, and much more liquid. Moreover there will be new massive trading opportunities around commodities, cryptocurrencies available for commodity traders and much more to do with these markets.
CFDs regulation will make all this safe and possible soon, and the world of commodities and cryptocurrencies will make the financial markets bigger, because billions of people in the developing world, who previously had no access to these markets, now will have. CFD trades on gold, crude oil, grains, and the cryptocurrencies are much faster than actual asset trading, and the resulting liquidity will attract even more long term investors.
We can safely assume that US regulators will eventually have to review their decision on CFDs, as well as other new instruments, and will lift the current ban. Because this ban at the moment, acts against retail traders’ interests. And ultimately, such bans prevent liquidity in the markets and economic growth.
Regulated CFD brokers offer very good services, they are very liquid to use, for trading up to $100 per point, and clients’ deposits are guaranteed up to $20,000. Some binary option brokers also operate under the same tough regulation and licensing rules, well rated brokers such as Olymptrade and others. Olymptrade review rankings are among the top 5 in the binary options industry, in terms of innovation and specialist traders’ demands, where CFDs, binary options and spot forex, can all be used in a single complex strategy.
On the Investor Greg website there is a lot of information available about these critical developments, where both CFDs and cryptocurrencies will play a vital role. The important thing is to stay focused and pay attention to these developments, because the negative thinkers will do their bests to talk bad about anything new, any new market or opportunity. But remember that even the negative thinkers are market participants and liquidity providers too, and they will simply be on the losing side of the big picture. The early adaptors on the other hand will be the winners.
You can read full story here – CFDs Regulation around the World
Good article, many good ideas!