How to trade stocks the smart way
The Basic of CFD trading
THE BASICS OF CFD TRADING What is a contract for difference (CFD)? CFD stands for contract for difference, a derivative product for speculating on the future direction of a market’s price. You won’t be buying or selling the underlying asset, which in this case is an individual stock. All that changes hands is the money equal to the price difference when the contract is closed. Basically, the price of the asset changes from the beginning to the end of your trade, and this difference will be your profit or loss.
Why trade CFDs on Deriv - Trade less than one share. The price of one Amazon share at the moment of writing this book is US$3,000, which many can’t afford. Fortunately, Deriv gives you the option to trade CFDs on a fraction of a share.
- Profit from down moves. Most brokers will only let you sell a share you own, whereas, with CFDs, you can sell first (also known as short selling) to profit from down moves. I will explain more under the section entitled Trend lower.
- Enjoy transparent, two-way pricing and instant execution. During normal trading hours, Deriv will display a Buy/Sell price of the stocks it offers. There is no need to wait for a broker to get back to you.
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