The advantages of CFD
CFDS (Contract for Difference, CFD for short) is a kind of otc tools, allowing traders use leverage on the spot market, index and commodity markets, and without the need for actual purchase of securities. CFD is essentially a kind of financial derivatives, is both sides (brokers and clients), upon the expiry of the contract with CFD trading products covered by the difference between the opening and closing.
The advantage of trading CFDs (CFD)
Do more than empty two-way trade.
CFDs is a kind of based on derivatives trading financial assets price difference, do not hold the real ownership of financial assets. Traders can rise in financial assets is buying, sell at the break, get profit of the difference. Stock contracts for differences, for example, because does not involve the use of stock ownership, so even if there is no stock can also first sell contracts, and don't need to borrow shares to a sell-off.
Increasing the efficiency of funds
Because of all the contracts for differences of products in the form of cash deposits leverage, financing proportion is usually 10 ~ 100 times, so the customer by a small amount of money can control the scale of the entire contract and improve the service efficiency of funds and investment returns.
Hedge other investment products
Contracts for differences can be done to do more empty characteristics can be used as a hedge of other investment products. A financial asset, such as what are you going to hold "but also fears that fall in the short term the asset risk, so you can use the contracts for differences to hedge to control the risk of short-term.
Flexible contract size
CFD trading contracts typically contracts will mark smaller, thus to provide smaller share of the transaction to retail customers, is advantageous for the retail customers widely participate in the international market only from institutional investors to participate in trading.
Connection of the global financial markets
Trading CFDs allow traders to easily buy and sell the world's major market indexes, gold, silver, crude oil, such as global commodity, make traders very easily on the same platform to participate in the global market. 24 hours a day, this tool can be deal, that retail investors will be they otherwise couldn't invest to trade on the market.
Lower transaction costs
Due to the difference between contract does not involve trading of title to the subject matters, so the stock and futures trading contracts for differences are not need, capital gains tax, stamp tax, and futures delivery costs, etc.
You should know the risk of leveraged products. Leverage allows you to profit to expand, also can let you losses. Trading CFDs you need to know when you do not hold the ownership of the assets, rather than could be obtained by the difference of assets profit. Before involved in contracts for differences deal, you should read the statement of our products.
CFDs (CFDs) way to trade
Contracts for differences in the way of general trade in accordance with the contract for the customer to the bank or broker to pay a certain amount of margin, in order to ensure transactions have the ability to resist risk, trading and settlement price valuation in the prescribed manner for trading and settlement. In trading, brokers or Banks in accordance with the contract according to the volume in the customer's deposit account freeze a percentage of the deposit, in general is 1 ~ 5%, while the rest of the provided by the broker or bank credit support for financing or securities. In contract period of adaptation (holding trading contracts at the time) will appear interest rate increase and decrease, if there is an interest and losses of the first consider to deducted from frozen margin (or added to the frozen margin), when has frozen the margin is not enough to pay interest has never frozen margin deducted, (some brokerage agent will stipulate in the contract if have frozen margin all losses due to interest the profit and loss, so brokerage chamber of commerce to freeze a percentage of the deposit, will be less than the original, of course). Due to the difference is not delivery contracts, namely the contract of goods not for physical delivery, only when the price difference to the settlement of cash settlement, so there is no deadline, contracts for differences in theory, of course, if the customer margin account margin, because of the interest on loans and wiped out, estimates that brokers or Banks will also be in accordance with the terms of the agency contract and settlement of your account at any time. When clearing, settlement price tend to be in accordance with the settlement and settlement when the market price, plus loan at this time of the goods if you are trading the buying cost is lower than the selling rate so you will have profit, otherwise there will be a loss, because the profit and loss is the number of all the goods in accordance with the contract to settle, so for you for margin trading, the amount of your profit and loss will be very big. And in CFD trading, interest on loans also counted in the transaction cost, so relative to you pay the deposit, loan interest is also a lot of spending, for example, your deposit ratio is 5%, and interest on loans is 5%, even if the prices of the goods has been unchanged, so you have to pay deposit is barely enough to support the interest of the year.