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What is a CFD?
Premium PIPS offers flexible trading conditions across a broad range of CFDs covering Indices, Energies, Metals, Commodities and more.
What is a CFD?
A CFD, or Contract for Difference, is an agreement between two parties to exchange the difference in an asset's price between when a position is opened and when it's closed.
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What is a CFD?
- A contract on price difference, not ownership
- A popular short-term trading vehicle
- Efficient use of capital
Speculate in both rising and falling markets
CFDs are derivatives based on an underlying asset, so you can take a position on its price without owning it outright.
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Speculate in both rising and falling markets
- Go long to profit from rising prices
- Go short to profit from falling prices
- No ownership of the underlying asset
Efficient use of capital
CFDs are leveraged products, so you only need to put up a small deposit — known as margin — to open a position.
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Efficient use of capital
- Only a small margin deposit required
- Leverage magnifies gains and losses
- Makes your capital go further
Hedging other investments
Because CFDs let you go long or short, they can also be used to hedge other investments.
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Hedging other investments
- Offset losses in a long-term portfolio
- Acts as a form of insurance
- No need to close existing positions
Flexible contract sizes
CFD contract sizes are typically smaller than the underlying instrument's standard size, so you can gain market exposure without committing a large amount of capital.
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Flexible contract sizes
- Smaller than the underlying instrument
- Tailor exposure to your risk appetite
- Gain exposure without large capital
Access global financial markets
CFDs give you access to markets that can otherwise be difficult to reach directly — including commodities like gold, silver and oil, and major global indices — without having to trade futures contracts.
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Access global financial markets
- Trade gold, silver and oil
- Access major global indices
- No futures contracts required
Disadvantages
As with any leveraged product, CFDs carry real risk: losses are magnified in the same way as profits and, in adverse conditions, can exceed your initial deposit.
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Disadvantages
- Losses magnified just like profits
- Can exceed your initial deposit
- No ownership of the underlying instrument
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