Basic terms that are used in CFDs
CFD stands for Contract for Difference, contracts between a trader and the financial services platform where he holds the account. The meaning of CFDs, however, does not explain their real nature. To understand the issue better and answer the question related to what are CFDs, a specification must be added. They are, in fact, derivatives. Therefore, financial instruments replicate an underlying price without implying its direct possession. What does it mean? In practice, the CFD of shares does not presuppose the direct purchase of securities but a forecast of their price. The very particular methods of CFD trading are made possible because this kind of trading takes place on OTC (Over the Counter) markets, i.e., unregulated. Consequently, they do not provide for a rigid regulatory cage, as in the case of regulated ones, allowing taking advantage of some advantages, which we will see below. Advantages of using CFDs Best Cfd Traders instruments cons...