What is a CFD?
A CFD offers you all the benefits of trading Shares without having to physically own them. Simply put, it is a contract that mirrors the performance of a Share, Sector or Index. It is traded on margin, and just like physical Shares your profit or loss is determined by the difference between the price you buy at and the price you sell at.
A Contract for Difference (CFD) is an over the counter derivative contract under which two parties agree to exchange the difference between the opening and the closing value of the contract, with reference to an underlying security. Put simply, CFDs allow Investors to speculate on the rise or fall of ASX listed securities, without the need for ownership of the securities. CFDs are a leveraged product requiring a deposit of cash collateral rather than the payment of the full value of the underlying position. Effectively cash is being borrowed by the long counterparty and lent by the short counterparty to finance the purchase or short sale of the underlying security.
CFD means “Contract for difference”. It is a contract between two parties a buyer and a seller, which stipulates that the seller will pay a buyer the difference between the current value of an asset and its value on the expiry date. If the difference is negative, the buyer must pay the seller.) CFDs are equity derivatives that allow investors to speculate on price movements, without having to own the underlying asset.
A “Contract for Difference”. It is an efficient means to enjoy the economic results of trading in shares and indices, without actually buying or selling on the exchange. This often translates into lower transaction costs and greater efficiency. Further information is located on the CFD Trading page.
