Categorized | CFD trading, Stock Trading

CFD: what it is?

Contract for Difference (CFD) is an over-the-counter trading instrument that allows traders to take advantage of leverage in the spot market to trade on indices and commodity markets without actually buying the underlying securities.

CFD is essentially a financial derivative product in which both parties (brokers and customers) trade at the difference between the opening and closing prices of the products covered by the CFD at the end of the contract.

CFD trading allows you to profit from the equity (such as dividends, price, etc.), but you do not actually hold the stock. CFDs are over-the-counter transactions and are not traded on exchanges.

CFD is an ideal trading tool for short-term technical trading and hedging of spot market positions, and it also attracts long-term investors.

How the CFD Market Works

CFD is an open contract. If you do not close your position on the trading day, you will trade to the next trading day. At this point, pay interest or get interest (depending on whether you are holding more than one single or empty one). You can hold your open positions indefinitely as long as you maintain sufficient margin available.

Margin and CFD Markets

CFD is a very popular margin product. You only trade a small portion of the total amount (20% for CFD, 7.5% for ETFs), which allows you to trade with the actual stock trades in the market Greater potential investment. Thus, for example, a $ 10,000 equity transaction in a CFD transaction costs a maximum of $ 2,000. If the $ 500 profit from the deal is only 5% for full stock trading, the return on CFD trading is as high as 25%. But the loss is also amplified.

 

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Symbol Bid Ask Spread
EURUSD 1.17880 1.17900 2
GBPUSD 1.32020 1.32050 3
USDCAD 1.27820 1.27850 3
USDJPY 112.090 112.110 2
USDCHF 0.98900 0.98930 3
AUDUSD 0.75560 0.75590 3
NZDUSD 0.68060 0.68110 5
EURGBP 0.89270 0.89300 3
EURCHF 1.16600 1.16630 3
EURJPY 132.140 132.170 3
AUDJPY 84.700 84.750 5
GBPJPY 147.980 148.040 6
XAUUSD 1290.28 1290.68 40
XAGUSD 17.133 17.183 5

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