Cfd ( Contract For Divergence )


In finance, a contract for divergence (or CFD) is a contract betwixt 2 parties, typically described every bit "buyer" together with "seller", stipulating that the buyer volition pay to the seller the divergence betwixt the electrical flow value of an property together with its value at contract time. (If the divergence is negative, together with thus the seller pays instead to the buyer.) In upshot CFDs are fiscal derivatives that let traders to cause got payoff of prices moving upwards (long positions) or prices moving downwards (short positions) on underlying fiscal instruments together with are oft used to speculate on those markets.

For example, when applied to equities, such a contract is an equity derivative that allows traders to speculate on part cost movements, without the necessitate for ownership of the underlying shares.

CFDs are currently available inward the United Kingdom, Hong Kong, The Netherlands, Poland, Portugal, Germany, Switzerland, Italy, Singapore, South Africa, Australia, Canada, New Zealand, Sweden, Norway, France, Ireland, Nihon together with Spain. They are non permitted inward the United States, due to restrictions past times the U.S. Securities together with Exchange Commission on over-the-counter (OTC) fiscal instruments.

source: http://en.wikipedia.org/wiki/Contract_for_difference



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