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the key characteristics of CFD trading

בלוגים20/08/2020 00:53בלוגalexעסקים ויזמות

 

CFD trading is basically trading a derivative instrument on the financial markets such as Stock . To give you some background, let us take a look at the meaning of a derivative instrument in more detail.

  One of the key characteristics of CFD is that it is a derivative contract. A derivative contract means that you are given a right but not an obligation to buy or sell something at a future time. Let me explain. When you go on holiday, you don't need to pay money to the rental store, but you can pay money to a guarantee that in the future, you will pay a sum in order to get access to a service or item. Whenever you trade one of these financial instruments, you are basically buying a "paper" asset. An example of a derivative contract's nature is the ordinary stock market "put". You purchase a share at a price known as today's "Market Price" and you sell it in the future at a price known as "Market Price Today". Within this very same contract, you can have a right to buy or sell the underlying asset. This is known as a right to with draw, or a right to sell. A famous credit default event is when a customer turns down a bank loan of some kind, and as a result the bank cancels his or her right to draw any of the residual payments that would have been made if the customer had actually made the loan. In fact, the bank now has a right to remind the person to repay the loan, because if the loan is not repaid, the bank will seize the collateral that was used to try to get the loan.

  

This right to drawer the paper assets is one of the few pre-property rights acquired by most people. The perfect and most mundane definition of a derivative contract is that it involves two parties agreeing to exchange a good or service for a good or service at a future time on a regular schedule. So it is not difficult to see that this contract is merely one of paper assets, a contract wherein one party agrees to sell or buy a good or service or asset at some future time for a payment known as a 

"premium".

  1. Live4trading.co.uk's CFD Brokers list
  2. CFD Brokers UK
  3.  


 

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