The advantages of CFDs :


Many forex brokers offer their clients CFDs or Financial Contracts for Difference. Wondering what these products are and what are their benefits? Here are some answers.

In financial jargon, CFDs are part of the derivatives family. They offer the opportunity to bet on the rise or fall of an asset. This asset can be a commodity, a stock, an index or a currency pair.

When trading with CFDs you do not have the underlying asset in question. As a result, capital movements are made on the difference between the purchase price and the selling price and not on the notional amount.

The advantages of CFDs
Leverage: When trading with CFDs, your broker provides you with a leverage that is often important. This tool makes it possible to multiply the gains and therefore to negotiate well beyond the capacities of its trading account. Be careful however to use it with a certain distance because it has the same effect on the losses as on the gains, it multiplies them also.
No expiry date: Unlike other derivatives, CFDs do not have an expiry date. Because of this, the contract does not lose value as time passes, you can keep it for a long time.
Prices are not influenced by the Market Maker: On most derivatives, the price is influenced by the issuer that adjusts its prices in its favor. This is not the case for CFDs. Brokers offer contracts with a course identical to that of assets.
No capital gains tax: Last but not least, CFDs are not subject to capital gains tax insofar as the investor does not physically own the asset in question. Contracts for differences are taxed in the non-commercial profits category.
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