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Contracts for Difference (CFD) Trading

Spread Trading is one of the world's fastest growing forms of financial trading, and now accounts for about 30% of the total volume of turnover on the London Stock Exchange. Global Trader 247 pioneered Spread Trading in South Africa and in three years has established it as an exciting, low-cost alternative to traditional trading.

WHO IS SPREAD TRADING?

  • Investors fed up with poor returns from professional fund managers in recent years and who want to take matters into their own hands
  • Those who want to make money whether markets are rising or falling
  • Former warrant traders who want strong gearing (in other words, the potential for big profits from relatively small price movements and capital outlay) but are disillusioned with the lack of transparency in the pricing of warrants
  • Conservative investors looking for a low-cost way to hedge their stock or bond portfolios against adverse market movements
  • Aggressive investors with strong views on the market who want to maximise their potential returns. For them, the primary attraction of Spread trading is its high gearing
  • Institutional fund managers looking to hedge their portfolios, or to gear up a particular view on a stock, index, bond or currency
  • Those who prefer to transact online in real time, without broker intervention
  • Those who prefer to pay no brokerage or back office administration fees

There's a good chance you fit into one or more of the above categories - and the best part is that you can use the demo trading account to see how you do. 

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Spread Trading articles

What is Spread Trading?
Spread Trading, otherwise known as Contracts for Difference (CFD) Trading in the institutional marketplace, is an exciting new alternative to traditional trading. With Spread Trading (this is the major difference), you never take ownership of the stock. All you are buying is the price movement in the stock (or bond, currency, commodity, etc.)

Make Money Whether Markets are Rising or Falling
With Spread Trading, you can make money whether markets are rising or falling. You can “go long” (buy in expectation of a rise in price) or “go short” (profit from an expected drop in price) with equal ease.

The Benefits of Gearing
One of the primary attractions of Spread Trading is gearing - the potential to earn large profits on small movements in the underlying share, bond, index, commodity or currency. Spread Trading gearing levels range from about six times on individual stocks to 50 times on bonds and currencies.

Nominate your own risk level
You nominate the risk you’re prepared to take. For example, more conservative investors can nominate R1 per point move in the ALSI 40 or FTSE 100 indices. More aggressive investors can increase this to R25 or even R50 per point

: : CFD's : : FUTURES vs ACTUALS: More on CFDs and Futures contracts
Contracts for Differences were developed to provide clients with all the benefits of owning a security, without having to take physical ownership of that security: CFDs expose buyers to the change in value of an asset without requiring that they purchase the underlying asset itself. Because you can't take physical delivery of a CFD, you have to settle the difference between the purchase price of the asset (the price at which you bought it) and the selling or settlement price in cash. This difference is either profit or loss.

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