What are CFDs?
CFD stands for Contract for Difference. CFDs allow you to open a contract for the difference of the price of an asset, from the point of opening to when you close. They are a versatile way to trade a wide range of markets, but it’s important to understand the risks too.
Go Long or Short
CFD trading allows you to take a position on the future value of an asset – so CFDs are very flexible and you can trade whether you think the market will go up or down. But remember, because you’re not physically trading in the underlying market, you never actually own any assets.
If a trader believes the price of the underlying asset is rising, she/he would open a “long position”. For a long position to make money, the closing price must be above the opening price.
If the trader believes the price of the underlying asset is falling, she/he would open a “short position”. For a short position to make money, the closing price must be below the opening price.
If a trader predicts correctly on the market’s direction and the closing price at the time of expiry is on the correct side of the opening price, the trader is paid the difference. A trader who predicts incorrectly on the market’s direction loses the difference.
Derivative Financial Instruments
CFDs are derivative Financial Instruments – their price is dependent upon or derived from one or more underlying securities.
24FX offers CFDs on a variety of underline assets, such as stocks, commodities, indices and currency pairs. Remember that no underlying asset is owned; it is simply a prediction on an underlying asset’s direction.
The trader has no rights or obligations in respect to the Underlying Assets relating to CFDs. There is no delivery of the Underlying Asset. The payoff is cash settled.
Over The Counter
Transactions entered in CFDs with the 24FX are not undertaken on a recognized exchange/regulated market, rather they are undertaken over the counter (OTC) and as such they may expose the trader to greater risks than regulated exchange transactions/Orders.
Leverage and Margin – Please Click Here for more information.
Can I control my exposure to risk?
Yes. There are several ways that you can monitor your exposure to risk, as well as a range of risk management tools such as stop loss orders available on our platform. Please Click Here for more information.
Commissions and fees
There are low commissions and fees for CFDs transactions traded with 24FX.
Rollover is the interest paid or earned for holding a position overnight. Each currency has an interest rate associated with it, and because forex is traded in pairs, every trade involves not only two different currencies, but their two different interest rates. If the interest rate on the currency you bought is higher than the interest rate of the currency you sold, then you will earn rollover (positive roll). If the interest rate on the currency you bought is lower than the interest rate on the currency you sold, then you will pay rollover (negative roll). Rollover can add a significant extra cost or profit to your trade.
24FX automatically calculates and reports all rollover for you.
Further to the above, the value of opened positions in some types of CFDs is increased or reduced by a daily financing fee “swap rate” throughout the life of the CFD (i.e. until the position is closed). Financing fees are based on prevailing market interest rates, which may vary over time.
Swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate.
For more information regarding the financing fees applied please Click Here.
How can I avoid CFD rollover?
You can avoid CFD rollover by closing your open position before the rollover date.
The most influential factor of the price of a CFD is the market price of the underlying asset. In general, as the price of the underlying increases, long positions gain value and short positon lose value. Conversely, as the price of the underlying decreases, long positions lose value and short positions gain value. Other factors are the:
Advantages of CFDs
CFDs are a simple way to trade price fluctuations in multiple global markets, but a trader needs to understand the risks and rewards of these before start trading.
Risk Warning: CFDs carry risk in the same way that any financial product carries risk – if the market moves against you, you lose money. However, the risks associated with CFDs can be greater because they are leveraged products. For more information about the risks involved, please Click Here.
Through MT4 you can create your own personal workplace. Fully equipped with both back-office reporting functions and front-end terminals, this trading platform gives you access to the most essential tools and resources needed to analyze the market and to start trading. The MT4 is the answer to your needs; it’s fast and effective, user friendly and flexible and it has been tested worldwide and chosen as a favorite amongst traders and institutions. Click Here to download the MT4
Minimum Trade Size
The minimum trade size in the MT4 is 0.01 lots. For certain commodities the minimum trade size may be higher, please contact your account manager for more information.
The current minimum deposit at 24FX is 250 USD/EUR/GBP or 25,000 JPY.
Trading hours vary by market and underlying asset type. Please Click Here for more information.
Trading Strategies – Please Click Here for more information.