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Financial Glossary
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> "Contracts for difference" Definition |
 Contracts for difference
CFDs are a derivative product designed for active traders who want to have extra leverage in their share trading.Instead of paying for purchases in full, they deposit a "margin" with their broker (typically 20% of the total purchase value) and that margin requirement goes up and down in line with the rise and fall of their portfolio. In effect, the investor is able to speculate with much more money that he actually has by borrowing from his broker and using the shares he has bought as collateral. If his investments perform well, he can get rich quicker than if he was not trading on margin. If they perform badly, the broker will demand more margin payments which have to be paid in cash, and the investor may lose significant amounts.Contracts for differences, or margin trading, are risky, and not for novice investors. Most brokers do not offer a CFD service, and the market is dominated by a handful of brokers who specialise in this area. Margin requirements vary, and most brokers will ask for a deposit of Ј10,000 before allowing a new client to trade on margin.
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Glossary 
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Dictionary
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Contracts for difference - CFDs are a derivative product designed for active traders who want to have extra leverage in their share trading.Instead of paying for purchases in full, they deposit a "margin" with their broker (typically 20% of the total purchase value) and that margin requirement goes up and down in line with the rise and fall of their portfolio. In effect, the investor is able to speculate with much more money that he actually has by borrowing from his broker and using the shares he has bought as collateral. If his investments perform well, he can get rich quicker than if he was not trading on margin. If they perform badly, the broker will demand more margin payments which have to be paid in cash, and the investor may lose significant amounts.Contracts for differences, or margin trading, are risky, and not for novice investors. Most brokers do not offer a CFD service, and the market is dominated by a handful of brokers who specialise in this area. Margin requirements vary, and most brokers will ask for a deposit of Ј10,000 before allowing a new client to trade on margin.
Contracts for difference : cfds are a derivative product designed for active traders who want to have extra leverage in their share trading.instead of paying for purchases in full, they deposit a "margin" with their broker (typically 20% of the total purchase value) and that margin requirement goes up and down in line with the rise and fall of their portfolio. in effect, the investor is able to speculate with much more money that he actually has by borrowing from his broker and using the shares he has bought as collateral. if his investments perform well, he can get rich quicker than if he was not trading on margin. if they perform badly, the broker will demand more margin payments which have to be paid in cash, and the investor may lose significant amounts.contracts for differences, or margin trading, are risky, and not for novice investors. most brokers do not offer a cfd service, and the market is dominated by a handful of brokers who specialise in this area. margin requirements vary, and most brokers will ask for a deposit of Ј10,000 before allowing a new client to trade on margin.
