Contracts for Difference

Advantages
Margin Trading
Characteristics
Example A - Long CFD
Example B - Short CFD

Advantages

CFDs have the following advantages:

• Stamp Duty – is not payable as a CFD is a 'synthetic product'.


• Short Selling – CFDs make it much easier to sell shares that you do not own. This gives you the opportunity to buy them back at a lower price, in order to benefit from a falling (bear) market.


• Gearing – allows you to leverage your investment, enabling you to magnify your profits or losses.


• Trading Strategies – CFDs can be used as a tool to hedge and manage exposure to risk.


• No Fixed Settlement Date – unlike many other derivative products, CFDs have no fixed settlement date. They can therefore be kept open indefinitely, as long as the margin requirements are met.