WHAT ARE CFDS AND HOW DO YOU TRADE THEM?

Contracts for Difference (CFDs) are a versatile way to trade financial instruments, and are offered on a broad range of assets. A CFD is an agreement to exchange the difference in the value of an asset from the time the contract is opened until the time at which it is closed. CFDs are derivative products, allowing you to trade on market price movements of financial assets, giving you the opportunity to profit from falling as well as rising markets, without owning the underlying instrument you have chosen to trade. Overall, Contracts for Difference are a great way to maximise your trading flexibility as they are not bound by minimum amounts of capital.

CFDS you can trade with us

At JFD, CFDs can be traded on 6 asset classes (shares, indices, commodities, bonds, bitcoins, ETFs and ETNs) with up to 1:100 Leverage (default: 1:50 max). You also have access to mini CFDs on major indices such as the DAX and DOW. Our Brokerage team is constantly updating our instruments to ensure your trading needs are met.

Why trade CFDs?

TRADE ON LEVERAGE

CFDs are traded on leverage, meaning you need only a small fraction of the total trade value to open your position. Therefore, you have to spend less capital which will free up more of your money to invest.

ABILITY TO GO SHORT

CFDs are very flexible and in general you can trade long (buy) or short (sell). It is easier and less complicated to short sell with CFDs. An instrument may be short-sold at any time, and since there is no ownership of the underlying asset, there is no borrowing cost.

IMPROVED MONEY MANAGEMENT

It is possible to trade or define your position size in a more detailed way with CFDs, which helps with your money management. At JFD, for some indices, such as the DAX and DOW, it is even possible to trade mini lots on them, at an incremental trade size of 0.1 CFD per index, to maximise your risk management even further.

HEDGE YOUR PORTFOLIO

You can use CFDs to offset any losses in your portfolio by short selling, especially in volatile markets. Reduce your exposure by using CFD trading to hedge the risk of your investments. For example, if the price of the stock you are investing in drops, you can use a stock CFD to off-set any losses in your stock portfolio by short selling without selling any real stocks (by using such a hedge setup you don’t sell the physical stock).

TRANSPARENT PRICING WITH CFDs

With CFDs you get maximum transparency in pricing, as they reflect 1:1 the price change of the underlying instrument. So a share CFD for example usually has the same pricing as the share itself. Also with CFDs, unlike other leveraged products such as options, knock-out barriers do not matter.

NO RUNTIME LIMITATION WITH SPOT CFDs

CFDs on single stocks, ETFs, ETNs, cash indices and crude oil (Brent & WTI) do not have an expiration date. Thus, you can keep your open positions running for as long as you choose. However, CFDs on futures contracts are an exception as they have maturity dates.

NO STAMP DUTY

Since with CFDs you don't actually own the underlying instrument, this means that you are not obliged to pay a stamp duty to the government, enabling you to save on each trade (please note that tax laws vary according to each country and are subject change). In this way, CFDs are a more cost-effective form of trading, than if you were going to buy/sell the asset class directly on the exchange. You can benefit on the price movement without having to worry about stamp duty.

ROUND-THE-CLOCK TRADING

Our CFDs can be traded during the opening times of the reference stock markets, but some are also tradable during times when the reference market is closed. You can find the current trading times of indices, commodities, and bonds that can be traded with JFD Brokers in our Contract Specifications

TRADE CFDs LIVE TODAY

FAQ

CFDs are an OTC (over the counter) product. Shares, futures or spot indices are the underlying instruments that the CFD is basing itself on. Futures may not be affordable for every client as they can be expensive e.g. if you are trading 1 future on the DAX, 1 point equals 25 Euros. In comparison, when you invest with CFDs, you are investing in a portion, making your trading more cost-effective e.g. you can trade as low as 0,10 Euros per point.

Furthermore, JFD provides low spreads on these symbols and minimal commissions. See our Contract Specifications for more details. Combined, these trading costs on some spot CFDs can often be significantly lower than when trading the underlying futures themselves.

Moreover, trading CFDs will not only add flexibility to your investment strategy, but also enable you to have more detailed risk management, by allowing you to open precisely the position size you require, and by permitting you to go short. With mini CFDs, it goes one step further, as mini equivalents will allow you to fine-tune your approach on a more granular level.

When you trade CFDs with JFD, we act as intermediaries between you and the liquidity providers: you are not just another small client facing a large giant. If you are trading CFDs with most others brokers, you do not have anonymity. At JFD, we protect your interests by providing anonymity and transparency. We are also ranked among the top 20 CFD & FX electronic brokerage firms and top 3 MT4 brokers worldwide (by Finance Magnates’ Quarterly Industry Reports 2016 Q1). Our real DMA/STP set-up means that not only are your orders recorded and passed accurately, but you are guaranteed the best service by going through us. Therefore, trading CFDs with JFD - and not directly with Market Makers - is always better, as we have your best interests in mind.
Since this is a very flexible product, with CFDs a high degree of risk management is required. It is important to note that CFDs are leveraged products. You are trading on margin and deposit only a fraction of your total position value. Leverage involves both benefits and risks. Please ensure that you fully understand the risks involved, by reading our full Risk Disclosure.
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Margin Trading is high risk and not suitable for all. Please ensure that you fully understand the risks involved.