What are CFDs?

The abbreviation CFD stands for Contract for Difference. A CFD offers traders an opportunity to possibly earn a profit from speculating on the price movement of an underlying asset, without actually owning the asset. A CFD is basically a contract between the buyer and seller specifying a certain purchase price of an underlying asset in any of the major financial markets: Forex, Stocks, Indices, Commodities, Cryptocurrencies. During a specific timeframe, the contract allows for profits or losses based on the changes in the price of the underlying asset.

How are CFDs traded?

While trading CFDs, you are predicting the price movement of specific underlying assets. If your prediction is that the price of an underlying asset is going to rise, you would choose to buy, but if you speculate that the price is going to drop, you choose to sell the asset. You do not physically own the asset when you are investing in CFDs, but you are investing in the chance to potentially earn a profit from the movement of the asset. It is important to keep in mind that you can lose your investment if the asset’s price should move in a direction opposite to your position.

For Example:

  1. You have researched the Amazon stock and you deduced that they indicate that the Amazon stock is going to plummet. After entering the PatronFX platform, and checking the real-time graph, you decide that you agree, in this case, you would choose to sell.
  2. You listen to a financial podcast daily, and they indicated that the price of the Nasdaq Composite might rise after an important announcement later that day. After performing your own research and checking the graphs, you agree with their assessment. In this case you would choose to buy.

In either of these cases, should you predict correctly, you would profit from these movements. However, an incorrect prediction would mean that you would lose your investment.

Choose from hundreds of different underlying assets to trade CFDs on using PatronFX’s easy to use trading platform.

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Company Information: This website (www.patronfx.com/eu) is operated by Forex TB Limited, a Cyprus Investment Firm, authorized and regulated by the Cyprus Securities and Exchange Commission with CIF license number 272/15. Forex TB Limited is registered at 45A Kratinou Street, 2040 Strovolos, Nicosia, Cyprus.

 

Forex TB Limited owns and operates the “PatronFX” brand.

 

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Past performance does not constitute a reliable indicator of future results. Future forecasts do not constitute a reliable indicator of future performance. Before deciding to trade, you should carefully consider your investment objectives, level of experience and risk tolerance. You should not deposit more than you are prepared to lose. Please ensure you fully understand the risk associated with the product envisaged and seek independent advice, if necessary. PatronFX does not issue advice, recommendations or opinions in relation to acquiring, holding or disposing of any financial product. Forex TB Limited is not a financial adviser and all services are provided on an execution only basis. Please read our Risk Disclosure document.

 

Regional Restrictions: Forex TB Limited offers services within the European Economic Area (excluding Belgium) and Switzerland.

 

Forex TB Limited does not issue advice, recommendations or opinions in relation to acquiring, holding or disposing of any financial product. Forex TB Limited is not a financial adviser and all services are provided on an execution only basis.

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