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What are CFDs?
A CFD, or contract for difference, is a type of derivative in the form of an agreement to exchange the
difference between the entry and exit price of a particular financial market. Unlike share trading,
CFDs require you to purchase on margin, a significantly less amount to purchase than buying the underlying stock.
Similar to share trading, profits or losses are determined by the difference between the prices at which you buy and sell.
By trading CFDs with FX2 DealBook, you can trade the underlying shares, stock indices, commodities and forex, all from a single
account.
Why trade CFDs?
CFDs can be inexpensive to trade, and are quite flexible compared with other trading alternatives.
This is what has led to their growing popularity in Australia. CFDs differ from
share trading because you don't actually own the share; it is a derivative product. This means that you can
seek profits from price movements without a large account deposit.
If you are currently trading, CFDs can make an excellent complement to most investing methods mostly due to the
fact that you can buy or sell a wide range of markets in any market condition. Because CFDs are based on underlying
financial market movements, they can also suit most trading strategies, as they follow the same patterns and trends
as the markets from which they are derived.
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