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What are CFDs?

What are CFDs?

Contracts for Difference (CFDs) are agreements that allow clients to trade on the price movements of underlying instruments such as shares, indices, commodities, currencies and bonds. CFD trading allows you to take a position on the future value of the underlying instruments whether you think it will go up or down.

In contrast to buying assets, when you trade CFDs you don’t physically own the underlying instruments i.e. you do not have to pay the associated costs of physical ownership such as stamp duty and account management fees. CFD investors benefit from market fluctuations. Clients’ open positions are valued in real time, with every tick of the market. Profits or losses similarly are credited to or debited from the clients account equity in real time. CFDs do not provide any right to the underlying instruments, any right to vote in a case of CFDs referenced to shares.

Although the price of the CFD usually reflects the price of the underlying asset, this isn’t necessary the case. Please be advised that you’re not buying or getting any ownership of the underlying asset itself.

Buying in a rising market

Trading with CFDs allows Clients to buy ("go long") and close the position later by selling. Selling at a lower/higher price than was the price of purchase causes loss/gain accordingly. If you believe that a market will rise, you can buy at a current price and sell at a higher price. However, if the market moves against you, may experience losses.

Selling in a falling market

Clients can also sell ("go short") and close the position later by buying. Selling allows you to profit from falling prices. If you believe that a market will experience a loss of value in the short time period, you can use CFDs to sell it immediately and your gains will rise in line with any fall in a price of the underlying instrument.

Leverage

Transactions conducted in the SWFX marketplace may be done on a margin trading basis, enabling a client to execute trades larger than the deposit, amplifying price movement effect. You have to deposit a small percentage of total trade value to maintain the same level of exposure. By depositing a small part of the total trade value whilst maintaining a full exposure, you are able to magnify your gains. For more information check margin requirements here

CFD Disclaimer

Positions opened with Dukascopy Europe IBS AS are not traded on any exchange. The prices and other conditions are set by Dukascopy Bank SA, Dukascopy Europe has to provide best execution and to act reasonably and responsibly in accordance with Terms and Conditions accepted by Clients and Order Execution policy of Dukascopy Europe IBS AS. Each CFD position which you open through SWFX results in entering into a contract with Dukascopy Bank SA. These contracts can be closed only with Dukascopy and cannot be transferred to any other broker.

Attention: Dukascopy Bank SA is counterparty for each transaction