CFDs can be seen as youngest step in the evolution of security trading. Because of its simplicity and transparency in using, it becomes more popular for investors. CFD stands for Contract for Difference. No matter if you primarily buy or sell, a CFD indicates the pure market movements. The profit or loss solely arise from the traded difference of the underlying asset; that is why it is called Contract for Difference. Additionally, CFDs are leveraged products, therefore less capital than other investment forms is needed. CFDs indicate different markets, e.g. stocks, indices, commodities.
Easy and Flexible Handling
Buy and sell uncomplicated and enjoy the flexibility of CFDs.
Spread your funds easily to different values, e.g. commodities and precious metals.
The occasional costs for buying and selling CFDs are very low.
Intraday-transaction costs do not apply. If long position CFDs are not sold the same day they have been bought, you have to finance the whole underlying.
There are no complicated formulas or calculations and factors like remaining terms and volatility are not necessarily required for CFD traders.
The cost structure is simple and easy to understand.
Benefit from Falling Prices
With a CFD you can´t just trade on rising markets, you also can go “short” and trade on falling markets.
As a private investor, you are not allowed to act in short selling normally. With a CFD you are able to trade short selling easily.
As a CFD trader, you can trade global. With a CFD account you have easy access to international markets in real-time. You are able to trade fast and uncomplicated.
Use the Leverage Effect
One of the best benefits is the possible leverage effect. With that effect, you can benefit from small market movements already with little capital.
Hedge your Stock Values with CFDs
If you hold shares, which you don´t want to sell, you can hedge them by short-selling. Hedging allows you to minimize your risk, without losing possible benefits.