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Contract for Difference –CFD


A CFD contract exchanges the difference between the entry price and exit price of a particular financial asset. Contract for Difference –CFD


A Contract for Difference or a CFD is a contract between two parties which are willing to speculate on the price movement of a financial asset. A CFD contract exchanges the difference between the entry price and exit price of a particular financial asset. A CFD may be used for speculating stocks, stock-indices, currencies, commodities or even other financial assets (inflation etc). A CFD consist two prices the price at the time that is opened and the price at the time it is closed. If the underlying financial asset rises in price, the buyer of the contract is paid from the issuer of the contract. CFDs do not have a specific expiry date like for example options contracts -CFDs are renewed at the close of each trading day and depending on the trader decision they are rolled forward or abandoned.

This type of instruments may be used for speculating both upward (long positions) and downward (short-positions) price movements. Leverage of capital is also offered and commonly used by CFD traders. Leverage may reach X10 or X20 for stocks and X100 for indices. Keep in mind that CFDs are not standardized products so each CFD broker has its own terms and conditions. Find CFD trading information at CFD Agent.


CFDs Common Underlying Financial Assets

Commonly used Stock-Market Indices:

  • Trading Dow Jones CFDs
  • Trading S&P 500 CFDs
  • Trading FTSE CFDs
  • Trading German Dax CFDs

Commonly used Commodities: 

  • Trading Gold CFDs
  • Trading Silver CFDs
  • Trading Platinum
  • Trading Wheat
  • Trading Sugar
  • Trading Oil
  • Trading Gas
  • Trading Carbon 

More Financial Indices Used:

  • Trading Inflation CFDs
  • Trading Volatility (VIX)

» Compare CFD Brokers


Exchange Traded CFDs

Exchange Traded CFDS were introduced in 2007 and are CFD contracts that are traded like common stocks.

 

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