In recent years are increasingly popular instruments of negotiation financial in the form of contracts for difference (CFDs Contracts for Difference). What are the main reasons for its popularity? What are CFDs a contract for difference (CFD) is an agreement between two parties to exchange the difference in the value of the contract between the price of opening and closing of the contract when it is completed. The advantages that offer these products and have given so much popularity are: short sales. Contracts for difference allow short sales that allow beneficairse of downs very easily, as well as the placement of long positions, which were previously only available to professional investors. But with the help of CFD short sales are becoming more efficient in terms of value, but in terms of performance easier to borrow shares. Low necessary margin. You can perform operations without having to deposit the total amount of the contract and finance a guarantee, that is 5 to 10 percent of the size of the transaction. This will allow you to invest in the portfolio of actions, not linking to all of their funds.
Market prices. You receive the spread competitivodel market without any kind of expansion that will allow you to trade at the same price as the stock market professionals. Fast execution of transactions. Your transactions will be executed immediately without delay. Markets.
Competes, you can negotiate with shares belonging to large numbers of markets, interest rates, raw materials, badges, etc. The size of the transactions. The minimum transaction volume is 0.1 lot = 10 shares. In this case the margin (guarantee) will be equal to an estimated $10 to $150 dollars (according to the price of the stock). The necessary margin trading in the main indexes of USA funds to a minimum contract will be approximately $35 $70 dollars (according to the valid price in February 2003). Hedging strategies. If you are shareholder, and do not intend to sell their shares, even if falling prices, you can open a short position in CFDs over any action (or any portfolio). As a result of their losses in the asset base will be offset by the corresponding benefits of CFD. Original author and source of the article