What is Trading
Contract for Difference is a contract between two parties, typically described as “buyer” and “seller”, stipulating that the seller will pay to the buyer the difference between the current value of an asset and its value at contract time (if the difference is negative, then the buyer pays instead to the seller). In effect, are financial derivatives that allow traders to take advantage of prices moving up (long positions) or prices moving down (short positions) on underlying financial instruments and are often used to speculate on those markets.
For example, when applied to equities, such a contract is an equity derivative that allows traders to speculate on asset price movements, without the need for ownership of the underlying asset.
- Expiry time of the order
- Type of asset
- Market movements
- Value of order
- Volatility of the chosen price
- When trading underlying assets you are not actually buying/selling them, so there are no additional borrowing costs and fees
- By opening Long and Short positions, your trading is a lot more flexible
- Trading allows you to take advantage of Leverage
- Maximise your profit potential by trading on both rising or falling market positions