A contract for difference (CFD) is a popular form of derivative trading. CFD trading enables you to speculate on the rising or falling prices of fast-moving global financial markets (or instruments) such as shares, indices, commodities, currencies, and treasuries.
Some of the benefits of the best CFD broker in India are that you can trade on margin, and you can go short (sell) if you think prices will go down or go long (buy) if you think prices will rise. With CFD trading, you don’t buy or sell the underlying asset (for example a physical share, currency pair, or commodity). You buy or sell a number of units for a particular instrument depending on whether you think prices will go up or down. We offer CFDs on a wide range of global markets and our is CFD trading legal in India instruments include shares, currency pairs, commodities, and stock indices.
For every point the price of the instrument moves in your favor, you gain multiples of the number of CFD units you have bought or sold. For every point the price moves against you, you will make a loss.
Can I trade CFDs without leverage?
Some providers allow you to trade CFDs without leverage. With capital sands, however, all CFD trades are leveraged. The amount of leverage offered depends on various factors including the volatility and liquidity of the underlying market, as well as the law in the country in which you are trading.
How do I use CFDs for hedging?
1. The way to use CFDs for hedging is by opening a position that will become profitable if one of your other positions begins to incur a loss. An example of this would be taking out a short position on a market that tracks the price of an asset you own. Any drop in the value of your asset would then be offset by the profit from your CFD trade.
2. Say, for example, you hold a number of shares in Apple but believe these shares may fall in value in the future. You could go short on Apple via a share CFD. If you are correct and your Apple shares fall in value, then the profit from your short CFD trade will offset this loss.
What is the difference between CFDs and futures?
1. When you trade CFDs (contracts for difference), you buy a certain number of contracts on a market if you expect it to rise, and sell them if you expect it to fall. The change in the value of your position reflects movements in the underlying market. With CFDs, you can close your position any time when the market is open.
2. Futures, on the other hand, are contracts that require you to trade a financial instrument in the future. Unlike CFDs, they specify a fixed date and price for this transaction – which can involve taking physical ownership of the underlying asset on this date – and must be purchased via an exchange. The value of a futures contract depends as much on market sentiment about the future price of the asset as current movements in the underlying market.
3. It is worth keeping in mind that with our CFD trading account, you can speculate on the price of futures contracts without having to buy the contracts themselves.