What is CFD trading?

Contracts for Difference (CFDs) are a great way to trade derivatives in financial markets, such as shares of public companies, currency pairs, commodities, and indices. Those who trade CFDs can speculate on the price movement of underlying assets without actually owning those assets, instead speculating from the rise or fall in prices with cash settlement.

Calculating CFD Returns/Losses

The way that your returns/losses from a CFD trade are calculated concerns only the price change of the underlying asset, and the agreement is handled between the buyer and seller exclusively, without an exchange.

When you trade CFDs, you’re predicting how the asset will move. Buying a CFD indicates that you’re expecting the underlying asset to gain in price. Selling a CFD means that your returns will come from the asset’s declining price. Remember that just because you don’t own the asset, negative returns from CFDs can still impact your trading capital, so make sure you properly research the underlying asset and its market performance before establishing a position.

Reaping the Rewards of CFDs

CFDs have gained in popularity because they don’t require traders to own underlying assets or use institutional exchanges, which allows them to participate in global markets they may not have had access to previously. Furthermore, in the case of certain assets like shares of companies, there is no need to go to the broker and find shares to borrow to short.

Instead, establishing long or short positions can be conducted instantaneously during regular hours. Either because of their geographical location, margin requirements, or restrictive regulations, traders can establish long or short positions within an immense array of assets thanks to CFDs.

With a wide range of options represented by CFDs available, traders can trade on wide range of different underlying assets including precious metals, commodities, stocks, indices, and even cryptocurrencies.

Please note: CFDs are leveraged products that involve substantial risk and may result in the loss of your entire balance.

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Company Information: This website (www.investous.com/eu) is operated by F1Markets Limited, a Cyprus Investment Firm, authorized and regulated by the Cyprus Securities and Exchange Commission with CIF license number 267/15. F1Markets Limited registration number is HE329568. The company is located at Kolonakiou Avenue 43, 4103 Agios Athanasios, Limassol, Cyprus.

 

F1Markets Limited and IOS Investments Limited belong to the same Group of Companies and share the “Investous” brand. IOS Investments Limited is regulated by the International Financial Services Commission of Belize with license number IFSC/60/511/TS/19.

 

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Before deciding to trade, you should carefully consider your investment objectives, level of experience and risk tolerance. You should not deposit more than you are prepared to lose. Please ensure you fully understand the risk associated with the product envisaged and seek independent advice, if necessary Please read our Risk Disclosure document.

 

Regional Restrictions: F1Markets Limited offers services within the European Economic Area (excluding Belgium) and Switzerland.

 

F1Markets Limited does not issue advice, recommendations or opinions in relation to acquiring, holding or disposing of any financial product. Past performance does not constitute a reliable indicator of future results. Future forecasts do not constitute a reliable indicator of future performance.

 

F1Markets Limited is not a financial adviser and all services are provided on an execution only basis.