CFD stands for Contract for Difference. CFD was first launched in early 1990s in United Kingdom at the request from some institutions and hedge fund trader. CFD is derivative product from others instruments that had exist. The characteristics that attract investors are much smaller capital because CFD uses margin trading concepts.
CFD allows you to get better profit from growth or decline incidents of the instrument that based on contract. CFD also has low input limit with little margin requirements and clients could make transaction start from 0,1 contract. As the kind of trading which has no assets, CFD needs contract as others derivative products. By contract, CFD could be traded with high liquidity and has the capability of short sells CFD is traded by margin and the transactions process could be done by fund deposit. Generally, broker use margin about 10% from the value contract.
A comparison of online broker is a great tool to better understand the offers sent to users. Several parameters are taken into account. The first element to consider is the estimation of software. This should be a great ease of use without the need for any download. It must also contain features that meet the expectations of users. The latter will have the opportunity to test different platforms before settling on one that suits them.
help Mini Online Forex FAQWhat Is A Currency Pair?
A currency pair is a Forex instrument, also known as a cross, for example USDJPY. When you trade in Forex, you always trade currencies in pairs. Thus in the example of USDJPY, this pairing indicates that you trade U.S. dollars against Japanese yen. If you buy dollars, you pay in yen, and if you sell dollars you receive yen.What Is Spot?
A direct trade on a market price with a standard settlement date (Value date) of 2 business days from the trade date.What Is Spread?
The difference between the Bid price (at which you can sell the trading instrument) and the Ask price (at which you can buy the trading instrument).What Is Swap?
Swap is the amount of money you receive or pay for holding a position overnight. It is formed based on central banks’ interest rates of those countries whose currencies you trade. Swap can be positive or negative.What Is Margin Calls?
If your position moves against you, your provider may ask you to put up additional funds in order to keep your trade open. This is known as margin call, and you’ll either need to add capital or exit positions to reduce your total exposure.What Is Leverage?
A leverage involves borrowing a certain amount of the money needed to invest in something. In the case of Forex, money is usually borrowed from a broker. Forex trading does offer high leverage in the sense that for an initial margin requirement, a trader can build up – and control – a huge amount of money.What Is Hedging?
A hedging is a strategy used by investors to reduce or eliminate the risk of holding one investment position by taking another.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.