What is CFD trading?
The definition of a CFD (or Contract For Difference) is an agreement to exchange the difference in value of a particular market between the time at which the contract is opened and the time at which it is closed.
CFDs are one of many forms of investing and trading the global financial markets, regulated by the UK’s Financial Services Authority (FSA). CFDs allow you to trade whether you think the price of a financial instrument is likely to go up in value (strengthen) or go down (weaken). If you are correct and the market moves in your favour, you will make a profit of your CFD size multiplied by each point that the market moves in your favour. If you are wrong you will make a loss of your CFD size multiplied by each point that the market moves against you.
With CFDs you do not actually own the underlying asset that you are trading. A CFD is a derived instrument, which means the price we quote is derived from the underlying asset. The CFD goes up and down as the underlying asset goes up and down.
From one trading account with FinancialSpreads.com, you have access to global stocks, indices, currencies, commodities, bonds and interest rates.
Here are a few examples:
Example one: Buying the UK 100
It is mid-July 2011 and you decide to take a position on our UK 100 market. Our quote is 5800 - 5801, and you buy one contract at 5801, the offer price. (One CFD contract on the UK 100 is worth £1 per index point).
A week later, our quote has risen to 5901 - 5902 and you decide to close your position by selling one contract at 5901 (the bottom end of our quote).
Closing level: 5901
Opening level: 5801
Difference: 100
Profit on trade: 100 x 1 contract x £1 per point = £100
Example two: Buying Vodafone shares
You want to buy 1000 Vodafone CFDs and our price might be 135.6-135.9 so your CFD position will be opened at the upper price of 135.9p. (One CFD contract on the UK 100 is worth £1 per index point).
A fortnight later Vodafone shares have risen steadily and our quote now stands at 154.2-154.5, so you close your CFD position by selling at the lower price of 154.2p.
Your profit is calculated by subtracting your opening price from your closing price and multiplying this figure by 1000 CFDs, so: 154.2p – 135.9p = 18.3p x 1000 shares = £183.
Closing level: 154.2p
Opening level: 135.9
Difference: 18.3p
Profit on trade: 18.3p x 1000 shares = £183
Of course, had the market moved in the opposite direction, you would have made a loss that may have exceeded your initial deposit.
Why trade CFDs with us?
Trading with FinancialSpreads.com means:
No Commissions
FinancialSpreads.com does not charge commission or fees. Our dealing costs are built into the spreads that we apply to the underlying market prices.
Tight Spreads
One of the main costs of CFD trading is the spread (the difference between the sell and buy price of a product). The wider the spread, the more costly it is for you to trade. FinancialSpreads.com was launched with the intention of providing customers with some of the tightest spreads in the market.
Some of our tight spreads include:
Low Margin Requirements
Margin is the amount of money you need in your account in order to make a trade. We offer exceptionally low margin requirements across all our markets, meaning you deposit only a small percentage of the total notional value before opening a trade. For example, the Min IMR for the UK100 Rolling Daily is 30, meaning for a £1 trade you need a minimum of just £30 in your account to open it.
For further information on all our margins please click here to see the full range of products we offer.
Wide range of Markets
FinancialSpreads.com offers you thousands of different products including shares, commodities and metals, currencies and indices. We quote Futures contracts as well as Daily and Rolling Daily contracts. You can make a trade on a variety of these products in just one currency. For further information on the full range of products we offer, please click here
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Responsible Trading with Automatic Stop Losses
CFD trading is a high-risk activity, but at FinancialSpreads.com we want you to enjoy your experience. Every trade you open will have a mandatory/automatic stop loss attached which is designed to help mitigate losses when you open a trade.
*Please note that stop losses are not guaranteed (unless you specifically select for your stop to be guaranteed), so are subject to slippage which means you may lose more than your initial deposit. Click here for more details about Guaranteed Stop Orders.
24 hour trading
Many of our markets can be traded 24 hours a day including the major currency pairs and US indices.
Excellent customer support
Don’t think that just because our spreads are better value you’ll get a lesser service. Our customer support is second to none. If you want to speak to our knowledgeable and friendly Customer Support team please do not hesitate to call +44 (0)20 7456 7061 or email support@financialspreads.com. (Monday – Friday 8am – 7pm, UK time).
Demo Account
If you’re new to CFD trading or interested in testing out our trading platform, we highly recommend that you sign up for a FREE demonstration account. You’ll be given a virtual £10,000 to begin trading with and will be able to access a selection of our most popular markets.
Free Charting Package
The FinancialSpreads.com website provides a FREE real-time, streaming charting facility which features both charts and diagnostics on all of our spread products. These sophisticated charts represent our prices which are derived from the underlying markets. A thorough tutorial is available from the trading platform which walks you through how to use the charting package.
Professional Browser Based Trading Platform
It is not necessary to download any software in order to access either our demo platform or the live trading interface. This means that you should be able to access your account from anywhere in the world that has an internet connection.