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CFDs

CFD stands for Contracts for Difference. It is a margin based trading. If the difference between the open and close is negative, the buyer pays to the seller. On the other hand, if the difference is positive, the buyer gains.

CFDs allow investors to take long and short positions without physically owning the underlying assets. It is a derivative product that is not regulated on any exchange. Because it is a margin based product, investors only need to put up a fraction of the actual value of the asset they wish to trade.

The growth of CFDs has been tremendous in recent years due to its simplicity, wide range of available products, and relatively inexpensive cost to trade. CFDs were originally developed in the early 1990s in London. It was created to imitate traditional equity trading and serve as a hedging instrument to existing investing products.

Benefits of CFDs

  • Wide range of trading instruments
  • World indices and stocks
  • Margin based trading
  • No stamp duty on UK shares
  • Flexibility
  • No delivery or trading expiration period
  • Receive dividends on long positions

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*Precious metals, energies, CFD contracts and the ability to earn interest on cash balances are available to MadaFX's MetaTrader 4 platform clients only.
†Forex (FX) trading on margin carries a high level of risk and is not suitable for all investors. Forex is traded with a high degree of leverage, which can work for you as well as against you, and it is possible to loss more than you invest. You should only invest funds that you can afford to lose and do not need to support yourself or your family. You should carefully consider all risks involved with forex trading as well as your financial situation, investment objectives, and risk tolerance before investing. Forex is traded over-the-counter (OTC) and not on a regulated Exchange. Market conditions may adversely affect order execution.

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