CFD is the abbreviation for Contract for Difference. It is a widely-traded financial instrument on the basis of futures. There are CFDs on stocks, stock indices, commodities, currencies and others. At the formation of a CFD, one party agrees to transfer to another party the difference between the current value of an asset and its value at the end of the contract. It should be noted that in practice, the investor has no legal ownership of the traded asset.
CFD contracts came into life in the 1980s in England. They applied only to transactions based on the difference in stock prices. Today, CFDs apply to almost all exchange instruments. Usually the contract has no specific expiration date and may be terminated at the request of any of the parties, who has been granted such a right.
Before the emergence of CFD trading on all instruments of international trade (e.g. stocks and commodities), only wealthy individuals had the ability to conduct such transactions, as the cost of entering into the stock exchange market was hundreds of thousands of dollars. Now, CFD gave access to trading instruments to a wide range of individuals with different economic status.
BENEFITS OF CFDs
When trading CFDs with TeleTrade you can:
- Make profit under all market circumstances – be it the rise or fall in prices of the trading assets.
- Choose from a wide portfolio of instruments to trade.
- Make money on international stock and commodity markets with low start-up capital.
- Minimise financial risks from future price changes.
- Receive dividends on shares (if the traded asset is shares)*.
*TeleTrade makes use of dividend adjustment. Dividend adjustment is a practice where an amount is credited on the client’s account in case he/she has an open position for purchase on the date of receiving the dividends, or deducted, in case he/she has an open position for sale.
TeleTrade gives you the opportunity to profit from trading with the following CFD assets:
- Shares of the New York Stock Exchange, where large corporations participate, such as the Bank of America, General Electric, Intel Corporation, Johnson and Johnson, Coca-Cola Company and McDonald's Corporation.