CFDs: What are CFDs?

What are Contracts for Difference (CFDs)?

A CFD (contract for difference) is a type of trading vehicle in the form of an agreement to exchange the difference between the opening and closing price of a particular financial market. Unlike share trading, CFDs don't require the full value to purchase, don't demand broker or exchange fees, and the instrument traded is never actually owned by the CFD holder. Similar to share or futures trading, profits or losses are determined by the difference between the prices at which you buy and sell. By trading CFDs with GFT, you can trade shares, stock indices, bonds, interest rates, commodities and forex, all from a single account.

Why are Australians choosing to trade CFDs?

	Buy or sell in rising and falling markets
	Access a wide range of financial markets
	Trade on margin for lower initial capital requirements
	Get competitive commissions and financing rates
	Dividend adjustment credits on long positions
	No software fees or monthly brokerage fees
	No expiration period for equity CFDs

Why should you trade CFDs?

CFDs can be relatively simple and inexpensive to trade, and are more flexible than other trading alternatives. This is what has led to their growing popularity in Australia and in European countries. CFDs differ from share trading because you don't actually own the share; it is a derivative product. This means that you can seek profits from price movements without a large account deposit.

If you are currently trading, CFDs can make an excellent complement to most investing methods mostly due to the fact that you can buy or sell a wide range of markets in any market condition. Because CFDs are based on underlying financial market movements, they can also suit most trading strategies, as they follow the same patterns and trends as the markets from which they are derived.

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