Business overview
Contracts for Difference
A contract for difference (CFD) is an agreement between two parties in which one party agrees to pay the difference in the value of the contract to the other party, based on the change between its opening and closing price. In the case of the CFDs offered by CMC Markets, the contracts are based on CMC Markets’ proprietary prices which are derived from underlying assets, such as equities, currency pairs, commodities and indices. In the case of a CFD, no ownership of the underlying asset is conferred by entering into the contract.
CFDs are easier to trade than equities or bonds as there is no physical market trade involved. The pricing is completely transparent and transactions are generally completed in milliseconds.
CFDs typically come with built-in leverage in order to amplify their risk and return characteristics.
Unlike conventional securities, CFDs can be used in an inverse manner, to go ‘short’ in declining markets. This allows customers to benefit from negative views on a given share or market, or to hedge a physical position they might hold elsewhere.
Risk Warning
