CFDs (Contracts for Difference) are derivatives that allow you to trade an underlying asset, without having to purchase that asset. As its name implies, a CFD is an agreement to exchange the difference in the value of an asset from the time the contract is opened until the time at which it’s closed. You can trade CFDs, long or short, to speculate on price movement or you can utilize CFDs to hedge an existing portfolio.
As a client trading Index and Commodity CFDs, you benefit from the following: ♦ Access to major Share Indices* around the globe including the ASX200, Nasdaq 100, and S&P 500 via MT4 and FIX API ♦ WTI and Brent pricing based on front month futures contracts**, which benefit from lower swap fees compared to spot, non-expiry and greater pricing transparency. ♦ Ability to speculate long or short or utilize to hedge existing positions *Index CFDs are cash instruments and subject to daily rollover fees. 3 day CFD financing is applied to open positions on Friday to cover the weekend (as opposed to 3 day FX swaps applied on Wednesday rollover). **Front month futures contracts are rolled over automatically on a daily basis.
CFDs are a leveraged financial product, which allows you to trade larger volumes than your deposit balance would otherwise allow. Similar to trading Forex, clients are required to deposit an initial margin in order to open a CFD contract. While this can magnify your returns, it also means your losses could be magnified such that you could lose more than the total capital you deposited. As such, clients need to manage their margins when placing and maintaining CFD orders.
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