What is a CFD and where to trade CFDs in Canada? Everything you need to know.
(Shutterstock) What is a CFD? CFD stands for Contract for Difference, a type of financial agreement that allows investors to speculate on the price movements of an underlying asset without taking ownership of it. A trader will open a long or short position in the asset, entering into an agreement with the CFD broker to exchange the difference in the price of the asset from when the contract was opened until it is closed. If the price of the asset moves in a favorable direction, the trader will make a profit, and if it moves in an unfavorable direction, the trader will suffer a loss. Should You Trade CFDs? CFD trading has several advantages that make it an attractive option for investors. Firstly, CFDs offer higher leverage than traditional financial vehicles, allowing traders to take significant positions with less capital at risk. Secondly, CFDs offer diversification as commodities, Forex, major stocks, and indexes are all available for trading from the same platform. Thirdly, CFDs