About CFDs

CFDs are one of the fastest growing trading products in the world – and according to Business Times, contribute up to 50% of volume on the London Stock Exchange.

They are among the most popular products for active traders in the UK, Australia and Europe and recently were made available to retail investors in Ontario and Quebec Canada.

What is a CFD?

CFD means Contract for Difference. Simply put it is a contract that allows you to benefit from the price movement of a given instrument without owning the underlying asset.

How does a CFD work?

If you think the price of Oil will go up you buy at the price offered by CMC Markets, alternatively if you think the price of Oil will go down, you sell at the price offered by CMC Markets. Just as you would with any investment or trading product.

The price at which you can buy or sell with CMC Markets mirrors the underlying market price. If you were trading shares, Gold Corp. for example, the price offered by CMC Markets would be the same or very close to the price offered on the TSX. This provides active traders with a transparent way to trade on margin.

There are no complex calculations behind deriving the price of a CFD like some derivatives, making it easy for a trader to compare CFDs with traditional instruments and published market prices.

For more detailed worked examples visit CFD example