What is Contract for difference CFD. How is it different from other products like futures or options?

CDF’s are leveraged products, mainly traded in UK and other EU region. CFD’s mimic the underlying pretty much like a futures instrument. However in CFD’s the concept of a lot size is not there…for example : You can buy 1 unit of FTSE CFD buy paying a certain margin, usually as low as 2-5%.

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As the name suggests, one needs to pay only the difference between the entry & exit price in a trade. It is a leveraged product and unlike Futures, in CFD’s you wont own the underlying. CFD’s are not governed by any exchanges as it is traded in over-the-counter market.

With the increasing popularity of Forex market in the last 8 years, similar leveraged product, CFD was introduced to include stocks, indices, commodities for leveraged trading. Basically, as an alternative hedge position on low margin for regular trades done on exchanges.

I believe it is a ‘Old Wine in a New Bottle’ with extra KICK!

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I would also like to know if there is expiry for CFD. like F&O…

thank you…

thank you…