What are CFDs?,
Contracts for difference (CFDs) are derivative products which enable you to trade on the price movement of underlying financial assets (such as indices, shares and commodities).
A CFD is an agreement to exchange the difference in the value of an asset from the time the contract is opened until the time at which it's closed. With a CFD you never actually own the asset or instrument you have chosen to trade, but you can still benefit if the market moves in your favor, or make a loss should the market move against you.
CFDs are a leveraged product, which means that you only need to deposit a small percentage of the full value of the trade in order to open a position. This is called ‘trading on margin’. While trading on margin allows you to magnify your returns, losses will also be magnified as they are based on the full value of the position, meaning you could lose more than any capital deposited.
How an Index CFD Trade Works Unlike forex,
when you trade an index, you simply buy or sell based on your opinion of how that index will perform. With FXCM, you pay only the spread to open a trade. We do not impose stop restrictions for most of our products—you can scalp major indices. Plus, our smaller contract sizes mean you can minimize your exposure in the market. TRADE YOUR OPINION OF GLOBAL STOCK MARKETS Want an ideal environment to trade US, European, Asian and Australian stock markets? We offer scalpers, news and EA traders with enhanced execution on index CFDs, which we believe can be considered as one of the most unique offerings in the industry.