CFDs: A Quick Introduction
CFDs (Contracts for Difference) allows online traders to speculate on the rising or falling prices of fast-moving global financial markets or instruments such as shares, indices, ETFs, commodities, currencies, cryptocurrencies and bonds. CFDs involve the same trading practices as the actual ownership of the underlying assets, but when trading CFDs traders do not own those assets. Traders can buy or sell a number of units of a particular instrument depending on whether they assume that prices will go up or down, and the difference between the opening price and the closing price is the profit or the loss values.
Trading CFDs is associated with the risk of loss, this is a concept that is important to remember when you start trading with these instruments.
Being one of the Top online brokers, Ainvesting offers CFD trading on many of the most popular instruments on the financial markets. Traders using the brokerage services of Ainvesting have an opportunity to operate without any additional exchange charges and no Stamp Duty is obligatory for them. Ainvesting enables its traders to trade shares, Cryptocurrencies, currency pairs, indices, shares, ETFs, bonds or commodities with no need to possess a huge capital for these trades.
Trading CFDs eliminates a huge amount of exchange-related fees and charges from brokers. There are no stamp taxes and no hidden commissions. There are no costs related to the shipment of shares, the registration of these shares, or any cleaning, or holding costs that arrive at the time of actual physical purchase of shares or other financial instruments.
Obviously, CFD traders are not empowered with voting rights with regard to the shares that they hold on CFD-trading. However, they do get the equivalent of cash, for any declared dividends.
Rather than buying 1000 shares of Apple on the brokerage site, the trader decides to buy 1000 CFDs of Apple shares on the Ainvesting trading platform. In case of Apple shares sell-off, and they drop by $4 in price, the trader will incur a loss of $4000. In case of an increase in Apple shares by $4 per share, the trader will receive a profit of $4,000 in the same way as if he has bought the actual shares of Apple.