Before going to an example of how a trade is done it is important to know some simple definitions to get started.
We explained before that with CFD trading you trade and make profit based on the opening price of the asset and the closing price. If your expectation is correct by the end of the trade, this is where you will make your profit.
“Going Long” By long it is meant that you actually trade with the expectation that the price of the asset will rise. So you expect the value to rise when you open the trade up until you will close the trade.
“Going Short” By short it is meant that you trade with the expectation that the price of the asset will go down while the duration of your trade position. So you expect the value of the asset to decrease and make profit from a falling price.
“Amount to Invest” The amount to invest is the initial amount of money you want to use for the particular trade (the margin). Keep in mind that the leverage will multiply this amount for you so you will be able to open a larger position in order to make higher and quicker returns.
“The asset” The asset, also known as the underlying asset you trade on, is the instrument you trade on or with. So for example if you trade in Facebook shares, the assets are Facebook shares. If you trade in gold, the asset is gold.
“The leverage” You probably know by now what is meant by the leverage. The leverage is the ratio that comes with trading an asset. The leverage will multiply your initial amount, which you want to trade with, and will let you trade with a higher position.