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CFD
At Trader’s Way, Prime Online Forex and CFD broker, we provide our clients with the very latest from trading apps, trading tools, and state of the art trading platforms, along with some of the most competitive trading conditions in the market. As part of our ongoing edu series, here’s a brief recap on CFD’s. A CFD, or a Contract For Difference, is where two parties agree to exchange the difference between the opening rates and the closing rates at the moment the contract is closed, with the difference being multiplied by the number of units as specified in the contract. A CFD is a derivative linked to the asset price and does not involve physical delivery of any kind. Simply put, when a trader goes long on EUR USD, he does not physically purchase euros and sell dollars. So, essentially when a trader trades CFDs, the trader makes a deal that at the moment of contract closure he agrees to exchange the difference between the opening and closing rates, multiplied by the specified units.
Example: Sam opened 1 standard lot of EURUSD long (that is, Sam bought 100,000 EUR-versus-USD CFDs). At the time of Sam's purchase, the current rate was 1.3000. Sam has just closed and the closing rate was 1.4000. When he closed, Sam made a profit = (1.4000 - 1.3000) x 100,000 = 10,000 USD
For more information, please check out Trader’s Way.
At Trader’s Way, Prime Online Forex and CFD broker, we provide our clients with the very latest from trading apps, trading tools, and state of the art trading platforms, along with some of the most competitive trading conditions in the market. As part of our ongoing edu series, here’s a brief recap on CFD’s. A CFD, or a Contract For Difference, is where two parties agree to exchange the difference between the opening rates and the closing rates at the moment the contract is closed, with the difference being multiplied by the number of units as specified in the contract. A CFD is a derivative linked to the asset price and does not involve physical delivery of any kind. Simply put, when a trader goes long on EUR USD, he does not physically purchase euros and sell dollars. So, essentially when a trader trades CFDs, the trader makes a deal that at the moment of contract closure he agrees to exchange the difference between the opening and closing rates, multiplied by the specified units.
Example: Sam opened 1 standard lot of EURUSD long (that is, Sam bought 100,000 EUR-versus-USD CFDs). At the time of Sam's purchase, the current rate was 1.3000. Sam has just closed and the closing rate was 1.4000. When he closed, Sam made a profit = (1.4000 - 1.3000) x 100,000 = 10,000 USD
For more information, please check out Trader’s Way.