- product description
- main function
- basic parameters
CFD Features
CFDs are neither futures contracts nor regular spot products. It is an innovative advanced financial instrument based on the spot market and absorbing the advantages of futures contracts.
The contract for difference is based on the spot market price as the contract price. When the holder wants to deliver, it is delivered at the spot market price at that time. Therefore, the contract for difference is traded based on the fluctuation of the spot market price. The profit and loss of the owner is also determined by the spot market price, so it is a financial instrument based on the spot market.
A contract for difference is a contract with a fixed contract size, trading unit, and quotation currency, and the same is true for futures contracts; CFDs can be used for commodities, stock index futures, stocks, bonds, and futures contracts, too, with a wide range of applications; CFDs It is a leveraged transaction. Brokers (banks or investment banks) that provide CFDs generally allow investors (traders) to trade on margin, which is what we often call "leveraged trading". Contracts, CFDs are designed and provided by brokers, futures contracts are also margin transactions, and contracts are designed and provided by futures exchanges.
So, in summary, futures contracts and CFDs are indeed very similar. However, there are indeed differences between the two. First of all, CFDs are traded without a fixed exchange. It is a non-centralized over-the-counter market (OTC), while futures contracts are traded in a centralized futures exchange; Secondly, the contract for difference is a non-deliverable contract, that is, the commodity (physical product or financial product) in the contract will not be physically delivered, and only the cash settlement of the difference will be made during settlement. Therefore, the contract for difference is theoretically unlimited, that is, investors (Traders) can always hold the contract, while the futures contract has an expiration date, and physical delivery must be carried out when it expires.
Therefore, CFD is an innovative advanced financial instrument that draws on the advantages of futures contracts.
CFDs are neither futures contracts nor regular spot products. It is an innovative advanced financial instrument based on the spot market and absorbing the advantages of futures contracts.
The contract for difference is based on the spot market price as the contract price. When the holder wants to deliver it is delivered at the spot market price at that time. Therefore the contract for difference is traded based on the fluctuation of the spot market price. The profit and loss of the owner is also determined by the spot market price so it is a financial instrument based on the spot market.
