Contract for Difference (CFD) is a leveraged financial instrument, which allows you to speculate on price movements of different markets, such as indices, commodities, currencies, shares and treasuries or its derivatives or value estimations.Unlike traditional trading on those markets, you don't need large amount of capital to start trading — CFDs are traded on margin, similar to Forex.CFDs can be used as to speculate on up and down movements, as to hedge or diversify your equities of commodities portfolio without the significant collateral requirements and lot sizes associated with classic Futures trading.Although the price of the CFD usually reflects the price of the underlying asset, this isn't necessary the case. Please be advised, that you're not buying or getting any ownership of the underlying asset itself.FEATURES OF CFD TRADING Contracts for Difference are made to fulfill most every trader needs:
- TRADE ON BOTH RISING AND FALLING MARKETSSame as Forex trading, CFD trading enables you to buy (go long) if you believe market prices will rise, or sell (go short) if you believe market prices will fall.
- EFFICIENT USE OF YOUR CAPITAL WITH HIGH LEVERAGECFDs are traded on leverage, meaning you need only a small deposit to open your position rather than having to put down the full value of a trade.
- EXTENDED TRADING HOURSA number of CFD instruments is traded outside classic markets trading sessions.
- HEDGING POSSIBILITIESIf you expect your existing stock or commodities portfolio may lose some of its value in a short term, you can use CFDs to cover this loss by short selling.