A Contract For Difference or CFD is simply an agreement to exchange the difference in value of a particular financial instrument between the time of opening of the contract and the time at which it is closed. CFDs are a trading product that give you more trading power, flexibility and trading opportunities. CFDs were introduced into the Australian market place in 2002 and have become one of the fastest growing financial products ever since. The popularity of CFDs amongst both investors and traders is most likely due to their flexibility and simplicity when compared to other equity derivatives.

MAJOR FEATURES OF CFDs

Simple and Flexible

You can benefit from rising and falling share prices by taking either a long or short position. If you believe the share price is undervalued you can buy share CFDs and take advantage of rising prices. If you believe the share price is overvalued you can short sell CFDs and take advantage of falling prices. With CFDs, you can profit from bull and bear markets and CFDs do not expire.

Leverage

CFDs are a leveraged product. This can be a more efficient use of your trading dollars as you only allocate a small proportion of the total value of your position to secure a trade. The key benefits to leveraging are the ability to potentially increase your returns and the ability to diversify your portfolio.

Variety

Trading CFDs with Minc Tracing gives you access to the top 500 Australian companies for lower costs than purchasing the underlying share. When trading it is important to consider liquidity, and the top 500 companies offer adequate liquidity.

Transaction Costs

Brokerage starts at 0.125% for online. This would equate to $12.50 when buying or selling $10,000 worth of stock.