Comparing CFDs to Forex Trading: Which Investment Is the Best Opportunity for UK Expats?

Money Finance

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British expats living in Spain may find that their knowledge of the markets in their home country helps them to make wiser investments abroad. Among the top options to consider are CFDs and forex trading.

Forex Trading and GBP Knowledge

To carry out forex trading successfully, you need to be able to predict what is likely to happen in the global currency markets. Deep knowledge of the Great British Pound and the forces that affect it can be extremely useful.

The Government’s monetary policy, the nation’s economic growth, inflation and confidence are the main factors that will see any currency rise or fall. We can see that the US Dollar has risen strongly against the GBP in 2020 because it is still considered to be a safe haven.

The Euro is another commonly paired currency. A British expat, who now lives in a country where the Euro is used, will be in a strong position to understand the different factors that are at play in the GBP/EUR pair. For instance, we can see that the uncertainty over Brexit has had a big effect on the GBP in recent years

If you follow British news sites and speak to people in different industries there, you will possess a valuable insight into what the future may hold in store for the GBP. In the same way, your local knowledge in Spain can help you to see the other side of the story and work out whether the Euro is on the way up or down.

CFDS Using Knowledge of British Industry

A CFD (contract for differences) is a type of investment vehicle that can cover currency trading, but can also be based on other markets.

The investor, in this case, is looking to benefit from any movement in the price of a certain asset, but without actually buying it. This can be done with stocks, commodities, or a range of other assets. By using leverage, you can invest a relatively small amount of capital to make a potentially large profit.

The investment can be done easily through an online CFD broker. The list of the best options currently includes the likes of Pepperstone, Plus500, and Tickmill. They are all FCA regulated and offer a maximum leverage of 1:30, but vary in other crucial details like app support and minimum deposit.

As with the forex trading example, a British expat living in Spain should be looking to take advantage of the knowledge that they have of industries in both countries to make smarter decisions.

The prevailing business sentiment is one of the most difficult factors for most investors to gauge, with many of them relying on reading studies and reports. However, any first-hand knowledge that you have of the British business world can give you an immediate advantage in this respect.

Choosing One of the Options
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Choosing One of the Options

The approach that you choose will ultimately depend upon where you feel most comfortable. If there is a particular area where you have specialist knowledge or information, then it would make sense to put it to good use.

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