| A CFD is
a contract to exchange the difference between the
opening value and the closing value of a trading
instrument, multiplied by the number of CFDs in
the contract. They are contracts for an individual
share, stock index, bond, interest rate, commodity
or foreign currency as the underlying market.
Why trade Contract for Differences?
As one of Europe’s fastest-growing trading
instruments, contracts for differences are very
simple and inexpensive to trade, and are more
flexible than other trading methods. A main benefit
of contracts for differences is that they suit
most trading strategies and can complement existing
investing methods. CFDs can be especially attractive
to sophisticated investors who are looking to
benefit from short-term volatility.
Contracts for difference were originally created
to imitate traditional share trading, but they
differ from traditional stock trading because
you don’t actually own the share; it is
a derivative product. CFDs offer active traders
significant benefits over other trading products.
For example, with CFDs, you may have the ability
to profit from both rising and falling markets.
CFDs are a leveraged product and therefore may
not be suitable for all investors. CFDs carry
a high degree of risk to your capital and it is
possible to lose more than your initial investment
or credit allocation as well as any variation
margin that you may be required to deposit from
time to time. You should only speculate with money
that you can afford to lose. Please ensure that
you fully understand the risks involved and seek
independent advice if necessary and prior to entering
into such transactions.
CURRENCY PAIRS
A major benefit of trading CFDs with us is the
wide range of order types that can be used. In
order to assist you in limiting your exposure
to loss, we offer a comprehensive and flexible
range of market orders that can be used to either
limit your losses or realize profits at specified
levels. CFDs, as with many other forms of financial
speculation, can carry a relatively high degree
of risk. A variety of order types can be placed
to get in and out of the market with ease, and
can also limit your exposure to risk.
Market order – An order
to buy or sell a specific CFD that will be filled
immediately at the next quoted price. This is
the most common of all order types. Be careful,
as you may not receive the most advantageous price
in a fast–moving market.
Limit order – Specifies
that a trade must be executed at a specific price.
Limit orders are placed to enter the market or
to protect profits. Because limit orders are not
executed unless they reach the specified price,
they may or may not be executed.
Stop order – An order
used to close out an open position, reverse a
position, or open a new position at a specified
price. They are typically placed to limit losses,
closing a position if a price drops or rises beyond
the specified point.
Trailing stop order –
A type of stop loss order that is set to follow
price movements by specifying the distance that
you would like your stop to move, depending on
the market direction and type of stop order placed.
Order cancels order (OCO) –
After entry into the market, a limit for profit
order and a protective stop–loss order can
be placed. When either the limit or the stop order
is executed, it will automatically cancel the
other order. This allows traders to automatically
execute specific trading strategies to limit losses
and protect profits without having to constantly
watch the market.
Parent and contingent order –
Two separate orders that are linked by an if/then
condition. The contingent order will not be subject
to a fill until the parent is filled. This allows
traders to set up the entire trade while they
are away from their trading desk, including entry,
exit and risk management, based on specific market
prices.
Guaranteed stop loss order -
Guarantees that you will obtain your stop loss
at the triggered value. There is an additional
charge for this order, and there are minimum distances
that orders must be placed away from the current
price.
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