Contracts For Difference

Contracts For Difference

A contract for difference, otherwise known as a CFD, is an agreement between two parties (investor and CFD provider) to exchange the difference between the opening and closing price of a contract. Some CFD providers may offer stop loss or limit order measures which allow you to limit losses by setting price triggers to close the open position. By the same token, there are traders who never trade stock options, never, not once. As a result, a small percentage of CFDs were traded through the Australian exchange during this period.

A stop-loss order can be placed when a CFD position is opened and is triggered when the price reaches a specified level. The current price may be 10070, so you may find that the CFD is quoted at 10068 to 10072. With CFD trading the primary costs for clients are normally the ‘commission’ and the ‘spread’, i.e. the difference between the sell and buy price.

Trade from Charts are available to all account holders when you subscribe to our ProRealTime package. CFD trading in the UK offers a clear tax advantage, since investors are exempt from paying stamp duty. Financial spread bets and CFD trades are leveraged products, which means you could lose more than your deposits.

This creates enormous opportunities to potentially profit from CFD trading, but also creates clear risks. Set your trading account to automatically close any trade that has achieved your desired level of profit. A CFD is basically an agreement to exchange the difference in the value of a particular asset from the time the contract is opened, until the time at which it is closed.

Using leverage, the amount we would need to cover this trade is 1% of the figure, which would equate to £481.03. As a portion of the companies’ earnings are divided between key shareholders, so they are distributed amongst our clients who are buying or selling CFDs for that company’s share.