Why trade CFDs
CFDs are an efficient, flexible and cost effective way to take a bullish or bearish exposure on an underlying share, index or commodity without owning the underlying.
Long or Short Positions
A CFD position can be taken long or short on a share or on an index without actually trading the underlying market. With reference to Share CFDs a short position can be taken without the need to engage in Securities Borrowing and lending or being limited to the T+3 days’ contra period associated with settlement.
CFDs are a leveraged product and traded on margin. Customers require only a small percentage (as low as 10% for selected Share CFDs) of the total contract value to establish a position. This small initial outlay provides the potential for accelerated gains as a result of favourable moves in the underlying. However leverage amplifies losses and the risk traders could lose more than their initial outlay. Effective risk controls must be used to help mitigate risk associated with leveraged products.
Lower Trading Costs
When compared with traditional vehicles such as shares, CFDs offer investors lower trading costs promoting more active trade management and capital efficiency.
Sophisticated Trading Strategies
Customers have the added ability to protect their existing shares portfolio against adverse market conditions by using CFDs to hedge their exposure via strategies such as pairs and spread trading.