CFDs

What are CFDs?

CFDs are type of financial contracts where you can trade the value of an asset. Unlike real stock trading, there’s no need to own them–the key feature is that it allows people worldwide to trade without having ownership of the traded CFD. A contract for difference (CFD) is an agreement between an investor and a CFD broker to exchange the difference in the value of a financial product (securities or derivatives) between the time the contract opens and closes.

How trading in CFDs works:

In a CFD trade, the investor expects the asset price to rise or fall. So, if the Investor expects that the price of the asset’s underlying market will rise, he/she can open a Long CFD position (Long CFD trading or Going Long) i.e. buy to profit from rising prices. On the other hand, if you expect that the price of the asset’s underlying market will fall, you can open a Short CFD position using a sell order to profit from depreciations in value (Short CFD Trading or Going Short). Opening Long and Short positions might result in losses as well. For example, if you open a long/buy position because you expect the price of the CFD to rise and the price falls instead, you will incur a loss. Likewise, if you open a short/sell position because you expect the price of the CFD to fall and the price rises instead, you will incur a loss.