Contracts for Difference FAQs


Ask a Question, Get an Answer from a CFD Trader

FAQs Index: CFD Trading Basics : Short Selling : More FAQs here : Stop Loss Q & A : Advanced FAQs : Advanced Trading Techniques

Always wanted to trade Contracts for Difference (CFDs) but didn't know how? Our FAQ's section on CFDs gives you all the information you seek. You can even have your questions answered by a market expert!

There are two ways to browse through the questions - either use the Index lists above or browse through the FAQ sections below. We will be adding more questions in the next few months.

What it Is, Who Trades CFDs & Why trade CFDs

Where did CFDs come from, and why the Weird Name?
What is a Contract for Difference?
CFDs Trading Examples
Who trades CFDs? Is CFD Trading Day Trading?
Difference between Investors and Speculators
Is Trading or Investing Gambling?
CFDs Suitability in an Investment Portfolio

Gearing and Margin Trading

What are Initial (Deposit) Margins?
What are Maintenance (Variable) Margins?
Gearing and Leverage
Beware very low CFD Margins
Interest and Financing Charges

Trading Costs (DMA or Market Maker) and CFD Expiration Dates

Contracts for Differences Trading Costs
Do Contracts for Difference Expire?
Direct Market Access and Market Maker Execution
Level 2 - Workings & Application
Exchange Traded CFDs / Commsec ASX CFDs

Shorting and Short Selling

Introduction to Short Selling
Naked Short Selling
Who are the Short-Sellers? How Popular is it?
Restrictions and Borrowing Costs
Borrowing and Lending Shares for Short Selling
Preventing your Shares Holdings from being Shorted
Shorting CFDs or Shorting Stocks? Is Shorting Legal?
Is Shorting Bad? Is Short Selling Evil?
Why is Shorting Riskier than Buying?
Shorting Small Caps? Shorting Disabled?
Shorting Benefits and Other Uses of Short Selling
Famous Shorters: George Soros and Simon Cawkwell

CFDs vs Spot Forex vs Spread Betting

Spot Forex versus CFDs
Spread Betting versus CFDs

Stop Loss Orders and using Index CFDs for Hedging Purposes

Stop Loss and Guaranteed Stop Loss Orders
Using Index CFDs to Hedge Investment Portfolio

CFDs vs Options vs Warrants vs Futures

CFD Trading versus Options
CFD Trading versus Covered Warrants/Turbos
Stock Index Futures

Trusts

Is a Trust Able to Invest in CFDs?

Sipps

Are CFDs allowed in Sipps?

Trading CFDs vs Stocks & Margin Loan Trading

What is a Share CFD?
Why trade CFDs instead of Stocks?
Trading CFDs on Margin vs Borrowing to Buy Shares
More Risky than Shares Trading?
Why are CFDs free of UK stamp duty?

Forex Spreads / Index Spreads

Index Trading and Commodity CFDs
What are Index Spreads?
Forex Spreads: Fixed or Variable Spreads?

Starting to Trade

Can I start trading with 200 Pounds?
Risk per Trade and Position Sizing
Shorting and the Importance of Timing

Advantages and Disadvantages

What's the Catch with trading Contracts for Differences?
Advantages and Popularity of CFDs
CFDs: Disadvantages and Pitfalls

MiFID

Markets in Financial Instruments Directive (MiFID)

The Banking Crisis

The Banking Crisis - Are Derivatives to Blame?
The Uptick Rule and the Shorting Ban

CFD Pricing and Corporate Actions

CFD Pricing: Daily Cash and Daily Futures
Trading Out-of-Hours and Liquidity
How Dividends, Stock Splits...etc are Accounted for
Delivery of Stocks and Public Disclosure

Market Makers and the Small Print

Should I steer clear of Market Makers?
The Small Print in CFD/Spread Betting Accounts
Changing Margin Requirements
CFD Providers Hedging Exposure

Researching Stocks and Trading Styles

Researching Stocks and Shares
Value Investing
Technical Analysis vs Fundamental Analysis?
Day Trading and Swing Trading
Developing a Trading System or Strategy
Small Cap Shares vs. Blue Chip Stocks?

How Successful Investors Trade and Think

CFD Trading Tips
Successful Traders versus Losers
Perseverance and Trading Success
Can you become a Millionaire trading CFDs?
Claiming Losses Against Capital Gains Tax
Trading Pitfalls and Common Mistakes

Advisory Brokers and Investment Funds

Advisory Brokers and Investment Funds
Why are CFDs not permitted in the USA?