What Are CFDs?


Contracts for Differences

A Contract for Difference (CFD) is a form of derivative trading. CFDs allow investors to speculate on the rising or falling prices of many instruments including Forex pairs, Stocks, Commodities, Indices, and Bonds. With CFDs you don’t buy or sell the underlying asset or instrument, instead you buy or sell a number of units of the particular instrument, determined by whether you think the prices will rise or fall. 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 make a loss. CFD is a leveraged product, meaning you can magnify your profits, however, your losses will also be multiplied, as they are based on the full value of the position.

CFDs on assets are over-the-counter (OTC) leveraged financial instruments the value of which is determined based on the movement of the value of an underlying asset. The client makes a profit or a loss on the CFD based on the direction chosen (buy or sell) and the value of the underlying asset. The amount of profit or loss is determined based on the value of the underlying asset at the opening of a position and its value at closing of the same position. The asset is settled in cash only and the client has no rights whatsoever to the actual underlying asset.

Variety of Instruments

CoverdealFX offers a wide variety of CFDs on financial instruments including Forex, Stocks, Commodities, Indices, and Bonds. This allows traders to diversify their portfolios with CFDs across multiple sectors of the financial markets.

Trade without Owning

Trading CFDs allows you exposure to a particular asset or sector of the financial markets without ever owning the physical product or instrument. This allows traders to speculate on assets without having to pay extra fees for shipping or storage of an asset.

Higher Leverage

CFDs often provide much higher leverage than traditional trading. Dependent on the financial instrument, CoverdealFX offers up to 1:30 leverage. Leverage magnifies an investment by allowing trades with more funds than the initial deposit.

CoverdealFX's Instruments

Forex CFDs

Foreign Exchange (Forex) allows investors to speculate on the strength of one currency against another, using popular or exotic currencies.

Index CFDs

Indices provide an indication of the strength and direction of a sector of the market, and are useful to speculate on global financial markets.

Stock CFDs

The Stock market is one of the most common to invest in as it allows for trading shares of popular companies, and often reflects global news trends.

Bond CFDs

Bonds are a fixed income instrument, making them less volatile. Investors purchase a bond which represents a loan given to a government.

Commodity CFDs

Commodities are raw materials such as precious metals or oil, that are often traded based on the global trends of supply and demand.

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Risk Warning: Trading CFDs is risky and can result in the loss of your invested capital. 74% of retail investor accounts lose money when trading CFDs. Please ensure that you understand the risk involved and do not invest more than you can afford to lose. Read full Risk Disclosure Statement. CoverdealFX is a domain operated by Coverdeal Holdings Ltd, which is regulated by CySEC under License No.231/14