A CFD is a contract between you (the client) and the CFD provider. The difference between where you enter the trade and exit the trade is the Contract for Difference (CFD). CFDs mirror the price of an underlying instrument. Quite simply, CFDs allow you to enjoy the benefits of trading an instrument without having to physically own it.
Originally created as a hedging tool for large institutions to cover their equity exposure, CFDs have exploded in popularity with individual investors, particularly in Europe and Australia. This is for good reason, as CFDs offer significant benefits in comparison to other trading products, specifically physical share trading.
For starters, CFDs are leveraged. The advantage of a smaller outlay, as well as the opportunity to gain from rising and falling markets translate into an exciting new trading product, which is widely considered a smarter alternative to physical share trading.
At CMC Invest, we offer you the ability to trade on thousands of instruments, including Global Shares, as well as International Indices, Sectors, Commodities and Treasuries. What’s more, if you have a view on a market sector (mining, energy or banking) or an entire Index (FTSE100, FTSE250, Dow Jones Industrial Average, CAC 40, DAX XETRA) CFDs represent a cost-effective way to trade these instruments from a single trading account.
In short, CFDs are simple and inexpensive to trade, making it an attractive trading product that is conducive to most trading strategies.
Contact our expert advisors to discuss how we can help build your portfolio today.
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