CFD Trading

CFD stands for Contracts for Difference and is a stock market investing instrument that works very similarly to stocks.

The price of CFDs follows closely the underlying stock price. So the price Microsoft CFD will be very close to the price of the Microsoft stock itself.

The differences between CFDs and Stocks are:

• You borrow and pay interest on 100% of the CFD price
• You deposit around 10% of the CFD price so leverage is very high
• CFD brokers either charge a standard brokerage fee OR a spread price where the CFD price you pay is slighly higher than the stock price
• You can short CFDs just as easily can going long
• When you go short, you get paid interest but you must pay the dividend
• When you go long you receive the dividend but you must pay insurance
• The dividend for CFDs is paid and received without any franking credits

Resources:

1. To learn how to trade CFDs, use this Stock Market Simulator

2. Information about Technical Analysis

Stock Market Software | Option strategies | Spread trading | CFD trading

Tags: CFD Trading