CFD TRADING
CFD: CONTRACT FOR DIFFERENCES
An arrangement made in a futures contract whereby differences in settlement are made through cash payments, rather than the delivery of physical goods or securities.
A CFD offers you all the benefits of trading shares without having to physically own them. Simply put, it is a contract that mirrors the performance of a Share or Index. It is traded on margin, and just like physical shares your profit or loss is determined by the difference between the price you buy at and the price you sell at.
BENEFITS:
MINIMUM INVESTMENT:
Margin trading allows you to free up your capital by placing only a small percentage of the value of trade in your account. Profit and loss is credited and debited to your margin deposit as the market moves. Margins are typically 10% or less on Share CFDs and 1% on Index CFDs.
COST EFFECTIVENESS:
Unlike physical shares, current legislation means that CFDs are not subject to Stamp Duty. This is because the trader does not physically own the share, and therefore is exempt from this governmental tax. Additionally, you are not charged a penny in account management or administration fees.
EFFICIENT:
As an efficient use of capita, traders can maximize their Return on Investment as only a small proportion of the value of the position is required up front.
FLEXIBILE:
Because you are trading on the price movement of a Share or Index without physically owning it, it is as easy to sell a Share or Index as it is to buy it. Selling a Share or Index as an opening trade is called going short, and presents you with the opportunity to profit from falling share prices. Therefore a CFD trader has the opportunity to profit from both
bull and bear markets as well as short term intra day movements.
This can be conducted ONLINE by using specially designed software called MARKET MAKER which is a leading trading platform.
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