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What is a CFD?
CFD stands for Contracts for Difference , which are gaining immense popularity with small and big traders owing to their unique features and flexibility. See Wikipedia: //en.wikipedia.org/wiki/Contract_for_difference" target="_blank">Contracts for Difference
CFDs are equity derivatives that are traded over the counter to enable traders to take advantage of fluctuations in stock values. At present, CFDs are traded in the markets of United Kingdom , Switzerland , Germany , Italy , South Africa and Singapore . You can trade CFDs online.
CFD is a contract entered into by two parties, wherein they agree to exchange the difference in the opening and closing value of a stock. The agreement may span a day, or a week or a few months on the discretion of the parties involved. At the end of the period as mentioned in their contract, the parties exchange the difference in the opening and closing stock values. The difference then gets multiplied by the number of stocks the parties pledged in their agreement.
CFD's are an attractive option for traders to make profits even when the markets are going down. Further more, you do not need to own a stock to enter into a CFD trade . This makes it an economically attractive option, since the returns to be gained are same as that of an actual stock owner, but the investment is only about 10 percent of what is required to own a stock.