I'll answer your question Gaz!
CFDs Contract For difference downside is exactly what makes it very appealing-your trading on margin.
In otherwords you buy/sell a stock/sector/comodity ect at which size you pre determine.So if you buy 1000 CFD shares at $40 and the margin is 3% then all you have to cough up is $1200($40*1000*3%=$1200).Its like a deposit on a loan for shares.You just bought $40 000 of the stock and $1200 is the deposit.If you sell that stock at $45 you make $5000 profit,which is roughly 317% as opposed to only 12.5% in the physical market.($5000-$1200/$1200=317%).
The downside is it works the other way as well-so strict risk management is essential.CFD providers provide automatic stop losses and also guaranteed fixed stop losses.
Another great thing about CFDs is the commission/brokerage is very minimal and depending what you are trading no commission at all.
Cheers
cfds vs shares, page-18
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Last
$58.52 |
Change
0.460(0.79%) |
Mkt cap ! $11.34B | |||
| Open | High | Low | Value | Volume |
| $58.31 | $58.95 | $58.14 | $17.51M | 299.4K |
Buyers (Bids)
| No. | Vol. | Price($) |
|---|---|---|
| 1 | 139 | $58.52 |
Sellers (Offers)
| Price($) | Vol. | No. |
|---|---|---|
| $58.53 | 474 | 1 |
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