CFDs: A Quick Introduction

Contracts for Differences (CFDs) is an investment instrument developed to allow market traders the benefits of possessing Shares, Indices, Forex, and Commodity positions without actually owning the underlying instrument itself. The market trader enters into a contract with a CFD at a specific price, and the difference between that price and the price that it is closed at is settled in cash.

It is important to remember that by trading CFDs it is possible to lose all or part of an investment.

Xtrade, one of the best online CFD forex brokers, offers CFD trading on verity and popular financial market. We provide our traders with the benefit of trading CFDs on margin using leverage, no Exchange charges and no Stamp Duty. CFD trading enables market traders to trade a portfolio of Shares, forex, Indices, or Commodities without having to lock up large amounts of capital.

CFD trading eliminates many of the brokerage and exchange-associated fees, like stamp taxes and commissions. Also, the expensive costs and delays of a physical delivery of the Shares, the registration, and any holding/safe custody charges that come with having a broker are eliminated, saving you additional time and money.

Unlike outright share ownership, CFD holders are not entitled to any voting rights, but they do receive the cash equivalent to any declared dividends.

Example:

You decide that you want to buy Google Shares. Instead of purchasing 1,000 Shares of Google from a Stockbroker, you buy 1,000 CFDs of Google on the Xtrade trading platform. If there is a $4 per share fall in the price of Google, you would receive a $4,000 loss. However, if there is a $4 per share rise in the price of Google, you would receive a $4,000 profit, just as if you had purchased the actual shares.

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Trading CFDs involves significant risk of loss.