What you need to know about CFD Trading

[Genehog]

WHAT ARE CFDs?

A contract for difference (also known as CFD) is a contract between two parties: buyer and seller, specifying that the seller will pay to the buyer the difference between the current value of an asset and its value at contract time.

However, if the difference happens to be a negative one, then the buyer pays to the seller instead. For example, when applied to equities, this kind of contract is an equity derivative that allows investors to speculate on share price movements, without the need for ownership of the underlying shares.

CFDs give investors the chance to take long or short positions. CFDs have no fixed expiry date or contract size, unlike futures contracts,. Trades are conducted on a leveraged basis with margins typically ranging from 1% to 20% of the notional value for CFDs on leading equities...

Read more here: Currency Trading Online

regards,

Gene

[Pinalli]

Thanks for the source....

I feel CFDs are risky because many traders enter this market with lack of product knowledge and investor understanding. But in actual fact CFDs themselves are not risky. They are just a financial product that you are able to trade and trade in any manner that you like. For example if you wanted to you could trade CFDs into a very risky fashion where you leverage your account to the maximum ensuring that you wins are huge and your losses are equally as large.

[anna575]

Thanks for the nice information. I think a CFD is a financial instrument linked to the underlying share price. I know it is risky but some of the traders interested in it.

[bentleywatson]

Awesome!CFD trading is the safest investing way.There is no need to purchase physical product.There is only a paper base agreement between seller and buyer with some terms and condition.
Main benefits are:
liquidity
No Expiry Date
Try to avoid excessive leverage to save from loss
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