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CFD Brokers

 

  • CFD(Contract for difference) is a type of financial derivative that allow traders trade a wide range of financial instruments(Shares, Commodities, Currencies, Indices or Treasuries etc) without ownership of the underlying assets. CFDs prices mirror the underlying instruments, so traders actually trade on the price movement of these instuments,but the underlying assets are never owned.
  • CFD Trading is done over-the-counter with CFD brokers. (Over-the-counter (OTC) or off-exchange trading is done directly between two parties without an formal exchange such as New York Stock Exchange, NASDAQ, U.S. Futures Exchange.)
  • Trading cost for traders include: Spread (which is the difference between the buy and sell price), commission(Only applicable for shares), overnight financing(also called hosting cost, charged at the end of each trading day, it can be postive or negative), Market data fees (for certain instruments, traders may need to pay market data fee)
  • CFDs are currently available in Australia, Austria, Canada, Cyprus, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, The Netherlands, Luxembourg, Norway, Poland, Portugal, Romania, Russia, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, United Kingdom and New Zealand.
  • In the United States, under the Dodd-Frank Act, CFDs are considered to be “swaps” or “security-based swaps”.
  • Advantages of CFDs
    • 24 hour Trading
    • Low entry threshold. Contract sizes of CFDs are smaller, so it’s more accessible for small traders.
    • Higher maximum leverage & Traded on margin & Low margin requirements. CFD Brokers offer higher maximum leverage than traditional stock brokers or futures brokers.If traders choose to trade with a high leverage, only a small amount of money is required to take large positions. In other words, traders can take a small deposit(namely, Margin) and using it as a lever to borrow and gain access to a larger equivalent quantity of assets. Higher leverage also means that both profit and loss will be magnified.
    • No shorting(selling) rules. Traders can choose to short(sell)  or long(buy).
    • CFDs make it much easier to access global markets. A wide range of underlying instruments(shares, indices, commodities, currencies and treasuries etc) are offered in one platform.
  • Disadvantage of CFDs
    • Compared to stock brokers or futures brokers, CFD brokers are not highly regulated, so traders should trade with a trustworthy & reliable broker.

InstaForex

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Company: InstaTrade LLC; InstaTrade Investment Company Ltd.   Warning: January 13, 2015:  French AMF published a updated list of forex brokers that offer forex trading service in France without authorisation of AMF.  InstaForex is on the list.   June 9, 2014:  The Ontario Securities Commission warned against InstaForex, because  instaforex “is not registered to engage in the business of (i) trading in securities or (ii) […]
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Plus500

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Note:  1  ‘Your capital is at risk . Before deciding to trade CFD or any other financial instrument you should carefully consider your investment objectives, level of experience, and risk appetite.’ .2. Plus500  only offer CFD Trading service. 3 You do not own or have any rights to the underlying assets. Please consider plus500’s Disclosure documents available on their website. […]
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Tradeo

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Tradeo is operated by UR TRADE FIX Ltd (CIF license number 282/15), a fully licensed Investment Services Company (registration number HE 336677) and is regulated and licensed under the Cyprus Securities and Exchange Commission (CySEC) to provide the following investment and ancillary services in relation to the financial instruments stated further below: Investment Services: 1. Reception […]
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Finexo

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Company: Safecap Investments Ltd. Note:  2015-7-2:  Cysec fined Safecap Investments Ltd €168,000 “The Cyprus Securities and Exchange Commission (the “CySEC”) would like to inform the public that, at the meetings held on the 2nd March 2015 and on the 25th May 2015, decided to impose the total administrative fines of €168.000 to CIF Safecap Investments Ltd (‘’the Company’) for […]
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