CFD stands for ‘Contract for Difference’. CFDs are agreements to buy or sell a specified asset that typically lasts for one or two months. Commodities and indices such as Natural Gas, Oil and the NASDAQ can be bought and sold as CFDs. Each CFD has its own market hours during which the rate continuously changes. Each CFD also has an expiry date when all open trades of that CFD will automatically be closed at 20:00 GMT whether in profit or loss.
Trading CFDs provides more trading hours than trading directly through an exchange. For example if you wish to purchase an index such as the S&P500 or the FTSE, you would typically need to do so during US market hours or UK market hours respectively. Trading CFDs of these assets provides you with a distinct trading advantage with more hours of the day to trade.
CFD trading is delivered using live prices and without the delays of normal stock trading. For example if you wish to buy a commodity such as Crude Oil you would typically need to wait for the quote. Trading CFDs of these assets provides you with a distinct advantage when trading with live prices..
Trading CFDs provides you with leverage. This means that you can trade with $50 or more for every $1 in your balance, allowing you to increase your exposure with less initial investment. For example, open a Gold Account with $5,000 and you’ll have $250,000 available for trading CFDs..
Trade indices CFDs to profit from specific markets. While currencies can be influenced by a wide range of factors, indices react more directly to specific market data. For example, when the Consumer Price Index (CPI) in the UK falls below expectations we can expect the FTSE to follow suit, thus profiting by a falling market.