Contracts for Difference have revolutionised the private and institutional investment markets in the last few years. CFDs have added a new dimension in flexibility and market coverage for professional and non-professional traders alike. Originally only available to institutional investors they are now one of the fastest growing ways to trade the financial markets. A CFD enables you to trade a financial instrument without having to physically own it and as such, trading CFDs carries a number of benefits over historic trading methods.
CFDs are a leveraged product which means traders only have to deposit a small percentage of the underlying value of the positions they wish to trade. This means that you can magnify the returns on your investment; it is important, however, to remember that losses will also be magnified.
Using CFDs when trading equities can increase your overall profitability as stamp duty charges and broker fees may be eliminated.
