CFD Trading is taking the investing world by storm. The number of people using CFD trading is increasing all the time, as CFDs become accessible to private as well as corporate investors. Whether you’re an experienced trader or just starting out, there’s never been a better time to add CFD trading to your financial portfolio!
A Contract for Difference (CFD) is a contract between two parties, typically described as "buyer" and "seller", stipulating that the buyer will pay to the seller the difference between the current value of an asset and its value at contract time.. (If the difference is negative, then the seller pays instead to the buyer.) In effect CFDs are financial derivatives that allow traders to take advantage of prices moving up (long positions) or prices moving down (short positions) on underlying financial instruments and are often used to speculate on those markets.
For example, when applied to equities, such a contract is an equirt derivative that allows traders to speculate on share price movements, without the need for ownership of the underlying shares.
CFDs are currently available in the United Kingdom, Hong Kong, The Netherlands, Poland, Portugal, Germany, Switzerland, Italy, Singapore, South Africa, Australia, Canada, New Zealand, Sweden, Norway, France, Ireland, Japan and Spain.
Contracts for difference are classed as “derivatives”, which means that they derive their value from the assets on which they are based. For example, with share trading CFDs (also known as equity CFDs), the underlying asset is the actual share.
In addition to regular shares, you can use CFD trading to make money on other assets and financial indicators, such as with commodity CFDs or forex CFDs. Different CFD brokers have a variety of CFD trading options to choose from. To get the latest and most complete list of CFDs available, you should consult your chosen provider. The last few years have seen an increasing number of brokers make an expanding number of both local and foreign markets available to CFD traders.
When you start to trade a CFD, you have the option of whether to go “long” or “short”. A long CFD means you are betting on the price of the underlying asset going up. Taking a short CFD, also known as short selling, and means you are betting on a fall in the value of the underlying asset.