What is a CFD?

‘Contracts for difference’, or just CFDs, are tradable products that follow the prices of global financial markets. A CFD allows you to obtain direct exposure to an underlying asset, for example, Gold, UK 100 or EUR/USD, without the need of owning the underlying asset. You will make gains or incur losses as a result of price movements in the underlying asset.

What are the main features of CFDs?

In both Buy and Sell scenarios, you do not actually own the underlying asset.
Access to leverage – you can multiply your trade size by using less capital. Up to 1:30 means that with as little as € 100 you can gain the effect of € 3.000 capital.
Short selling is also available – opening Sell positions is just as straightforward as opening Buy positions.
Low minimum deposit requirement – a relatively small amount of money is required to start trading stocks, forex, commodities and many more financial instruments.

What is the objective of CFD trading?

The objective of CFD trading is to speculate on the price movements of an underlying asset (generally over a short term). Your profit or loss depends on movements in the price of the underlying asset and the size of your position.

For example, if you believe the value of a stock, such as Apple, is going to increase, you can open a Buy CFD position (also known as “going long”) with the intention to close the CFD position at a higher value. The difference between the price you opened and the price you closed the CFD position equates to your potential profit or loss, minus any relevant costs.

If you think the value of a stock, such as Facebook, is going to decrease, you can open a Sell CFD position (also known as “going short”) at a specific price, with the intention to close it at a lower price. Your profit or loss is calculated based on the difference between these opening and closing prices.

This site uses cookies to offer you a better browsing experience. By browsing this website, you agree to our use of cookies.