What is a CFD?
CFD stands for Contract for Difference. It is a derivative financial instrument that allows you to speculate on the price movements of various global assets (like shares, indices, commodities, and cryptos) without physically owning them.
How CFDs Work
A CFD is a contract between you (the trader) and the broker. You agree to exchange the difference in the price of an asset from when the contract is opened to when it is closed.
- Going Long (Buying): Speculating that the price will rise.
- Going Short (Selling): Speculating that the price will fall.
Key Features of CFD Trading
Leverage and Margin
CFDs are traded on margin, meaning you only need a fraction of the total position value to open a trade. While this boosts potential returns, it also amplifies risks.
Access to Multiple Markets
Through Avora Markets, a single CFD account grants you access to forex pairs, major international stock indices (like the US30 or UK100), key commodities (like Gold and Brent Crude), and digital currencies.
Costs Involved in CFD Trading
Trading CFDs typically involves spreads (bid-ask difference), commissions (on certain account types like ECN), and swap fees (holding costs for overnight positions, though swap-free accounts are available for Islamic traders).