What is CFD

The most popular method of making money with broker Opteck is CFD. It’s a contract for difference the value of multiple assets. What is CFD? It’s a kind of contractual agreement and obligation between the two parties, the essence of which is to transfer the difference between the fair value of the asset and its final price following completion of the contract. It must be remembered that the conclusion of such a contract does not transfer ownership rights to the asset itself. In practice, the upcoming CFD expiration dates are not indicated, and the contract may be terminated at any time at the request of one of the parties.

What is CFD and what are its strong sides

Using CFD in the trade, you get:

  • to profit in any condition and trends of the market (the income from growth and from lower asset prices);
  • to give preference to any of the markets as well as to choose from existing financial instruments trading;
  • earn money with small initial capital;
  • to minimize financial risks, insure yourself from future price changes;
  • to make a profit on the underlying asset (for example, if the underlying asset in a CFD are stocks, so the dividends you receive it from them).

CFDs belong to the category of financial derivatives. To trade in the market CFDs are much simpler than, for example, gold, shares or currency. In this case, there is no need to transfer the asset, the same gold or stocks. Here, the investor profits on the difference value of the asset at different points in time.
In trading operations with CFD use the so-called “leverage” that allows the investor to trade many times exceeding its collateral Deposit.

The use of leverage enables the investor to obtain income, having a small initial capital. Ie CFD trading can provide high returns on investment.

The use of leverage, a customer pays a certain percentage (from the trading account of the investor removed a certain amount in the event of a rollover to the next trading session) that compensates the broker’s costs of providing credit.

In operations with CFDs you can go long (buy) and short (sell) position by selling, therefore, the asset that does not have in stock.

With increasing number of different market tools that you are attracted to forming the investment portfolio, reduced probability of losses in case of unfavorable price changes on individual assets. Now you know a little more about what is a CFD and can to learn more with our big learning Opteck program.