CFDs, or contracts for difference, are a type of trading instrument. You can trade a wide array of underlying assets, including shares and currencies.
So how do contracts for difference work?
Let's take a closer look…
You trade on margin with CFDs
Like with other financial derivatives, you trade on margin with CFDs. This means you put down a small portion of your overall exposure ... ››› more
If you want to trade shares, commodities, indexes and currencies, you have a range of different trading instruments to pick from.
One of these trading instrument is a contract for difference or CFD.
So what exactly is a CFD? And what can you trade with CFDs?
Read on to find out…
The ins and outs of a CFD
A CFD is a financial derivative. A financial derivative is a contract whic... ››› more
Contracts for difference (CFDs) provide you with a great way to trade shares and indices.
They appeal to many traders as the pricing is very transparent, they're quite simple to understand, and fees and charges are much less than buying shares outright.
To really get to grips with trading CFDs, there are a few key terms you need to understand.
Read on to find out what these are…
T... ››› more
If you want to invest in shares for the short-term, have you considered trading contracts for difference (CFDs) instead?
Yes, CFDs come with higher risks as you're trading a geared instrument. But by opting to trade CFDs instead of buying shares, there are several benefits.
Read on to find out more…
CFDs versus shares
Here are three reasons why you should opt to trade CFDs instead... ››› more
If you want to trade shares and indices, one option you have is to use contracts for difference (CFDs).
To trade CFDs, it's important you understand the basic principles that apply to this trading instrument.
Read on to find out what these are and how they apply to trading CFDs…
CFD factor #1: The value of CFDs
As CFDs are derivative instruments, this means they derive their value... ››› more
Contracts for difference (CFDs) aren't just for trading shares. You can also use CFDs to trade exchange traded funds (ETFs).
This means you're not relying on the performance of a specific share with your CFD trade. You can potentially profit from the performance of a particular market, index or sector.
So how does this work?
Read on to find out…
The benefits of using CFDs to trade... ››› more
When you decide to trade a derivative instrument like contracts for difference (CFDs), you need to get to grips with gearing and trading on margin.
It's these aspects that give CFDs their money multiplier effect, which boosts your potential profits (and losses). And it's vital you understand how they work before you start trading.
Read on to uncover what you need to know about gearing and tr... ››› more
Trading contracts for difference (CFDs) has a number of benefits. One of these key benefits is the money multiplier effect at work because you trade on margin.
But it's this aspect of CFD trading that also makes them risky. If a trade doesn't work out, your losses can quickly mount up.
So how can the margin work against you when you trade CFDs?
Read on to find out…
The downside of... ››› more
One of the reasons that traders choose contracts for difference (CFDs) is the gearing aspect they offer.
Gearing amplifies the movement of the underlying share price. This can work for you by multiplying your potential profits, but against you too as it also multiplies your losses.
Gearing comes from trading on margin.
Read on to find out how this work…
The impact of trading CFDs ... ››› more
If you've decided that trading is for you, there are a number of different instruments you can use to do it.
For example, if you want to trade the price movements of shares you could trade contracts for difference (CFDs) or you could spread trade.
So what is the difference between these two forms of trading?
Read on to find out…
The similarities between CFDs and spread trading
... ››› more
One of the benefits of trading contracts for difference (CFDs) is you can put short trades on.
This means if you think the price of a share is going to fall in value, you can potentially profit from this move by selling CFDs instead of buying them.
But short selling has its risks. So how can you improve your chances of success?
Read on to find out…
Follow these six rules to impro... ››› more
The gearing aspect of trading contracts for difference (CFDs) is one of the reasons traders find them attractive.
But gearing can work against you. And that's why you must understand the risks you take on when trading CFDs and take steps to control this risk.
So what is the effect of gearing on you as a CFD trader? And how can you control the risks of trading CFDs?
Read on to find out… ... ››› more
One of the benefits of trading contracts for difference (CFDs) is you can potentially profit from the drop in the price of a share. This is known as going short or short selling.
The problem with shorting a share is that if it doesn't go your way, it has the potential to keep rising, increasing your losses.
So what happens in you put a short CFD trade on and it goes wrong?
Read on to find... ››› more
If you're thinking about trading contracts for difference (CFDs), you may be wondering how they differ from investing in shares.
There are a number of differences. And it's vital you understand these differences before trading CFDs.
Let's take a closer look at what these differences are…
CFDs versus shares difference #1: Risk
The risk of trading CFDs is much greater than investing... ››› more
Contracts for difference (CFD) appeal to traders thanks to the money multiplying effect of gearing.
But this gearing also works against you. If you don't run tight stop losses, you're at risk of hefty losses.
Let's take a closer look at how you can rack up significant losses if a trade doesn't work out as you hoped…
The gearing aspect of CFDs comes from trading on margin
When you ... ››› more
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