A CFD (or Contract For Difference) is simply an agreement to exchange the difference in value of a particular financial instrument between the time at which the contract is opened and the time at which it is closed.
Watch our short video below, which provides an introduction to CFD trading:
Benefits of CFDs over traditional trading
Profit from rising or falling markets
CFDs offer greater flexibility than normal share trading as you can go 'long' or 'short' on shares, forex and other financial markets. This opens you up to a world of trading opportunities as you can profit from either rising or falling markets.
Magnified trading exposure
Leverage is one of the key advantages of CFD trading, as it allows you to profit from a market without having to put up the full value of the position. To open a CFD position, traders put up only a small fraction of the contract value, known as a deposit or margin. This is 'leveraged' or 'geared' - meaning it is multiplied - as is the potential profit and loss.
Broad range of markets
CFDs can be used to trade an extremely wide range of financial products, from global stock indices and a full range of forex pairs, to commodities and options, plus an exceptional choice of shares. Available from one online account, CFDs offer an easy way to start trading across a large cross-section of the market.
Low cost trading
Charges for online CFD trading can be low, depending on the provider. With IG Markets, our pricing is both low and transparent; we have no hidden charges. We offer some of the lowest rates across a huge range of world markets, including thousands of global Share CFDs at guaranteed market prices.