- product description
- main function
- basic parameters
NO1: What are Contracts for Difference (CFDs)?
What is a CFD?
According to the Contracts for difference (CFDs) product risk warning issued by the European Securities and Markets Authority (ESMA) on February 28, 2013: "Contracts for difference are agreements between buyers and sellers to exchange related assets at the end of the agreement ( The difference between the current price of a stock, currency pair, commodity, index) and its original price."
At present, most of the transactions of foreign exchange currency pairs, precious metals, indices, stocks, and commodities provided by foreign exchange brokers in the retail market to traders are carried out in the form of CFDs.
NO2: What are the characteristics of contracts for difference (CFDs)?
From this definition, we can see the characteristics of CFDs:
1. There are many types of underlying assets for CFDs transactions, not only stocks and currency pairs can be used as trading assets, but also commodities, precious metals, indices, etc. can be used as underlying assets for trading. Taking Exness as an example, the CFDs products currently provided mainly include: foreign exchange currency pairs, precious metals, crude oil, and virtual currencies.
2. CFDs is a transaction of financial derivatives. In fact, buyers and sellers will not actually purchase related assets (stocks, currency pairs, commodities, indices), but only contractual agreements based on asset prices.
3. Since the CFDs transaction is only based on the contract agreement on the asset price, it is only necessary to deposit part of the margin at the broker to calculate the difference between the investor's opening price and the closing price of the foreign exchange currency pair. If the difference is If positive, the CFDs broker will pay the difference to the trader, if the difference is negative, the CFDs broker will charge the difference.
4. Since CFDs trading adopts the method of margin trading, it will inevitably involve the issue of leverage. At Exness, the maximum leverage we give traders is unlimited leverage to help professional traders test their own trading strategies.
5. CFDs are derivatives transactions, which have high risks while being profitable. Traders need to be cautious when trading.
NO3: What are the benefits and risks of Contracts for Difference (CFDs)?
Contracts for difference (CFDs) are traded in the form of margin, which is inherently leveraged, because it is a double-edged sword for traders. While magnifying profits, it may also lead to magnifying losses for traders.
In fact, in the early days when CFDs were created, it was in the activities of mergers and acquisitions in the stock market. Because CFDs transactions are exempt from stamp duty, can be leveraged, and are extremely concealed, they will be used in company mergers and large-value stock transactions in the 1990s.
Later, with the development of the Internet, a company called Gerrard & National Intercommodities (GNI) launched CFDs to private clients and retail markets through its online trading agency GNI Touch.
Since then, contracts for difference (CFDs) have become popular in the retail market.
But for traders, contracts for difference (CFDs) are profitable but also have high risks. Traders may lose all their funds, so they may not be suitable for all investors.
What is a CFD?
According to the Contracts for difference (CFDs) product risk warning issued by the European Securities and Markets Authority (ESMA) on February 28 2013: "Contracts for difference are agreements between buyers and sellers to exchange related assets at the end of the agreement ( The difference between the current price of a stock currency pair commodity index) and its original price."
At present most of the transactions of foreign exchange currency pairs precious metals indices stocks and commodities provided by foreign exchange brokers in the retail market to traders are carried out in the form of CFDs.
The characteristics of CFDs:
1. There are many types of underlying assets for CFDs transactions not only stocks and currency pairs can be used as trading assets but also commodities precious metals indices etc. can be used as underlying assets for trading. Taking TCG as an example the CFDs products currently provided mainly include: foreign exchange currency pairs precious metals crude oil and virtual currencies.
2. CFDs is a transaction of financial derivatives. In fact buyers and sellers will not actually purchase related assets (stocks currency pairs commodities indices) but only contractual agreements based on asset prices.
3. Since the CFDs transaction is only based on the contract agreement on the asset price it is only necessary to deposit part of the margin at the broker to calculate the difference between the investor's opening price and the closing price of the foreign exchange currency pair. If the difference is If positive the CFDs broker will pay the difference to the trader if the difference is negative the CFDs broker will charge the difference.
4. Since CFDs trading adopts the method of margin trading it will inevitably involve the issue of leverage. At Exness the maximum leverage we give traders is unlimited leverage to help professional traders test their own trading strategies.
5. CFDs are derivatives transactions which have high risks while being profitable. Traders need to be cautious when trading.
NO3: What are the benefits and risks of Contracts for Difference (CFDs)?
Contracts for difference (CFDs) are traded in the form of margin which is inherently leveraged because it is a double-edged sword for traders. While magnifying profits it may also lead to magnifying losses for traders.
In fact in the early days when CFDs were created it was in the activities of mergers and acquisitions in the stock market. Because CFDs transactions are exempt from stamp duty can be leveraged and are extremely concealed they will be used in company mergers and large-value stock transactions in the 1990s.
Later with the development of the Internet a company called Gerrard & National Intercommodities (GNI) launched CFDs to private clients and retail markets through its online trading agency GNI Touch.
Since then contracts for difference (CFDs) have become popular in the retail market.
But for traders contracts for difference (CFDs) are profitable but also have high risks. Traders may lose all their funds so they may not be suitable for all investors.
