CFDs, or contracts for differences, although they are usual in the Spanish portfolios since 2007, still appear as a new and revolutionary way of trading before the more conventional alternatives. But to make this difference we must analyze what are the characteristics that make a product original and advantageous to other financial instruments such as futures and warrants, which keeps many similarities, but also some essential differences of CFDs. To see these differences, we will take as an example the CFDs of IG Markets, one of the leading providers of CFDs in Spain. Let’s take a look at some of these similarities and differences. Leverage similarities. CFDs, warrants and Futures enjoyed the effect of leverage. I.e. to take position only it is necessary to put a deposit that does not mean the total of the value of the underlying on active which is operated, since the inverter does not physically possess the asset.
Short position. Through the trading of CFDs, warrants and Futures is possible to benefit from the downward trend of the market, it is say, you can open position selling to then buy at a lower price and thus make a profit. Guaranteed Stop differences. Products of this nature involve a high level of risk. CFDs offer the possibility of using one serial guaranteed stops to limit losses where the movements of the market are not expected. This is an option giving the warrants or futures. Payment of dividends. Performing operational of CFDs on shares, settings that reflect the effect of interest and dividends are calculated daily and apply to your account daily.
No maintenance cost. IG Markets CFDs do not require any costs to open the account, just as there are no maintenance costs. 24 hours. Using CFDs on currencies and indexes, IG Markets offers a continuous service of trading 24 hours a day, so that the customer can benefit from the major world markets. Without expiration. CFDs are not subject to any expiration, by the that position can be closed when the customer wants it. However there are some exceptions in the case of CFDs on forwards and raw materials. If you are interested in the operational through CFDs, learn about these instruments to verify that they are the appropriate method for your type of investment. You will find a variety of resources that will help you in your trading at IG Markets. The above comments do not constitute investment advice and therefore IG Markets does not accept any responsibility for any use that can be made of them. CFDs are a leveraged product that entail a high level of risk and may result in losses that exceed your initial deposit. Make sure that you understand the risks involved and perform a constant monitoring of your investment.