What is CFD Trading? – Basic tutorial
CFD Basics: Facts of the derivate
Are you looking for valuable information on the subject of “CFDs”? – Then you are exactly right on this page. With more than 7 years of experience in the financial markets, we will explain the exciting topic of contracts for difference. On this page, you will find the basics and valuable tips.
Contracts for difference are over-the-counter contracts that can only be purchased from an online broker. When you trade with brokers, you conclude a transaction for a contract. The contract is based on an underlying asset (stock, currency, commodity, etc.) and imitates its price 1:1. As an investor, you do not own the direct underlying asset, but only the contract or claim against the online broker.
CFD trading always occurs between the two parties “Broker” and “Trader”. In the following sections, we will explain to you step by step how trading with contracts for difference works and what risks and opportunities there are.
Advantages and disadvantages of CFD Trading
The biggest advantage of CFDs is that traders/investors can invest in any asset with a small amount of capital. Traders get very fast and easy access to the markets through an online broker. What was very difficult a few years ago has now become very easy thanks to the Internet.
In the following table I have summarized all advantages and disadvantages for you:
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