CFD (Contract for Difference), or contract for difference is a derivative contract may be basically financial instruments (stocks, bonds and other securities and derivative instruments such as futures contracts for commodities or index value stocks, etc.).
A contract for difference is an agreement between two parties to pay the difference between the purchase price and the sale price. If the current price of the transaction value of the contract increases, the seller pays the buyer the difference. If prices fall then the buyer pays to the seller.
Thus, CFD allows you to get a better advantage of the growth and also to decrease the incidence of the underlying instrument contracts. In addition, the CFD has a low input threshold with a small margin requirements and that clients can make transactions, ranging from 0.1 exchange contracts.
With CFD trading, you can make a profit if:
- An increase or decrease in the stock market, using CFDs on individual shares his / her own or CFD futures on the stock market.
- The existence of price changes on the world’s most popular product, with the help of CFD on commodity futures exchanges.
- An increase / decrease in the bond market, with the help of CFD bonds and stock futures on interest rates between banks.
- You can use more sophisticated strategies, using multiple tools in combination.
In order to observe the general trend of price movement and facilitate transactions untul then use the instrument as a permanent instrument, regardless of the applicable contract.
Toward the end of the day the transaction of any contract period, all positions should be closed. If the position remains open at the end of the day then all positions will be automatically closed at the price prevailing at the time. The next day the transaction cleared for the next contract from the instrument.
CFD on futures contracts futures. This means that any instrument can be traded for a period of time, after which all positions should be closed.