Contract for Difference (CFD) has been gaining popularity among both the novice and experienced traders because of its simplicity and flexibility in complementing various trading strategies. CFD provides leverage, which mean gains and losses may be magnified. Therefore all traders should understand how the instrument works and risks involved before they start trading it.
A Contract For Difference (CFD) is a tradable instrument that mirrors the movements of the underlying asset. It allows traders to take advantage of the asset’s price movement without physical ownership. Our Direct Market Access (DMA) CFDs allow traders to participate in the order book of the underlying exchange, as well as entry into pre- and post- market auctions.
Essentially, it is a contract between the client and the broker.
CFDs is traded similarly to ordinary stocks but offers numerous advantages over ordinary share trading. It is also used as a diversification tool, allowing you to trade from margin requirements as low as 10% for selected Equities CFDs and 5% for certain World Indices CFDs, enabling your capital to work harder and possibly achieve a higher return on equity.
CFDs add a greater flexibility to traders in their trading strategies.
In addition to trading long positions as traditional stock investors, CFD traders have the option to take on short positions. Hence, gains can potentially be made in both bull or bear markets.
CFDs provide the ability to hedge an existing physical portfolio.
No expiry means no time decay.
Access a wide range of global markets and trade multi-assets through a single online CFD trading account.
Efficient use of traders’ capital.CFDs provide leverage to traders so that they can trade without the need of depositing the full value of a position. This allows traders to utilise excess capital more efficiently rather than being committed to one transaction.
There are commission and financing charges for CFDs. Please refer to https://cfd.cgs-cimb.com.sg/cfd-commission-financing.html for more information.
CFDs may not be suitable for customers whose investment objective is preservation of capital and/or whose risk tolerance is low. Customers are advised to understand the nature and risks involved in margin trading. Types of risk that traders should be aware of are counterparty risk, market risk, currency risk, liquidity risk and etc.
Please read through our General Terms and Conditions for more elaborated risks.