Why trade CFDs?

CFDs are becoming an increasingly popular way to trade, thanks both to their simplicity, flexibility and the access they provide to global markets. You can...

Leverage your investment potential

CFDs are traded on leverage, so you can increase your exposure to an underlying asset from the same initial investment. To open a CFD trade, you need to deposit only a fraction of the total trade value, usually around 10-30 per cent, allowing you to take a larger position than would be possible if you needed to fund it in full.

Leverage magnifies both potential profits and losses. This is great news if the market moves in the direction that you expect, but it also carries a high degree of risk if the market moves against you.

Trade on markets around the world

CFD trading gives you access to a wide range of markets that would not otherwise be available to retail investors. It is as easy to trade on the price movement of commodities such as oil or gold as it is to trade an individual equity. CFDs also allow you to speculate on whole indices with a single trade.

Profit when markets fall as well as rise

By selling ('shorting') a falling market you can profit in exactly the same way as you would from buying a risng market. If you believe that a company or a market will experience a short term loss of value, you can use a CFD to sell today, with the idea of buying back in the future for a profit. As always, if your trade moves against you, your position will result in a loss.

Hedge other investments

As CFDs offer the ability to go short as easily as long, they can be used to provide 'insurance' against price falls in an existing portfolio. For example, if you have a long-term portfolio that you wish to keep, but you feel that there is a short-term risk to the value of your investments, you could use CFDs to mitigate a short term loss by 'hedging' your position. If the value of your portfolio falls, the profit in the CFDs should offset these losses.