A Contract for Difference (CFD) for Stocks is an agreement between the buyer and the seller. It means that the seller will pay the buyer the difference between the Stock’s current price and its price at the point the contract specifies..
By trading CFDs on Stocks or stocks, investors are speculating whether the value of the stock will rise or fall without actually owning underlying stocks or Stocks. This flexibility can help you to easily diversify your portfolio without being tied down through traditional Stock ownership or spending out huge costs for company stocks.
HOW TO TRADE CFD STOCKS?
With CFD Stock trading, you don’t buy or sell the underlying asset. Instead, you buy or sell a number of units for a particular financial instrument, depending on whether you think prices will go up or down. 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 will make a loss. Since you trade on the expectation of a price movement you can take a short position (expecting the price to decrease) as well as a long one (expecting the price to increase), you can still make a profit when the Stock falls in value — not just when it rises.