CFD trading

Introduction to CFD trading

CFD (contract for difference) is a trading tool which allows the trader to have the benefits of owning a trading instrument (such as Forex, stocks or indices) without the need of buying the instrument itself; this allows a bigger impact on smaller trades.

For example, if you want to have the impact of 1000 ABCD shares, you don’t have to actually own them. By purchasing 10 CFDs of ABCD on 10Pips trading platform you will get the same impact as you get on owning 1000 shares. So, if there is a 5$ rise on the ABCD cost, you will earn 5000$ as if you purchased the actual shares.

There is a major difference between buying CFDs and buying the actual shares. When buying CFDs there are no exchange fees and most of the inefficiencies of buying shares are avoided. Another major benefit is the fact that CFDs can be traded on margin; a trader can trade a full portfolio of Shares, Indices, Commodities or Currencies without tying up a large amount of capital. Using the above example, if a trader purchases $50k worth of CFDs, he will only be asked for $1000 margin.

Over the past few years, CFDs have grown in popularity dramatically and we believe that this will be the preferred way to trade the financial markets in the future. 10Pips offers CFDs with zero commissions and attractive margin requirements.