Trading CFDs on the long and short

Have you ever wondered how a seasoned trader trading in CFDs makes money even when the market is going down? The reason is that you can make money trading CFDs in a rising as well as a falling market. 

Trading CFDs means that you take a position on the basis of how you expect the price of the underlying reference instrument of the CFD to move.   

Trading CFDs on the long and short is a technique where you go long when you are expecting the market to rise and go short when you expect it to go down.  

A long position is set up by initiating a buy order as your opening position and sell order when you close the trade. Similarly, a short position is created when you initiate a trade with a sell order and close by placing a buy order. 

The next crucial aspect of trading CFDs is that opening and closing trades must be equal and opposite of each other. When trading CFDs if you open with a buy order, you close it with a sell order and the other way round. If you have created multiple positions while trading CFDs, you can close them with a single closing trade. 

Whichever way you do it, the profit that you make or the loss you book in trading CFDs is the difference between the value of the opening and closing positions, net of any charges that you must pay or the benefits that accrue to you in relation to the CFD.