CFDs are among the most exciting investment instruments for stock market speculators. Although they have existed in the English-speaking world for several decades, their success in Germany began only a few years ago. CFD stands for Contract for Difference.
CFDs appeal to many investors because they offer several benefits over other security categories. To appreciate these benefits, you first have to understand the mechanism of a CFD.
One of the benefits of CFDs is that the buyer does not actually acquire the underlying mentioned above, he merely bets on how it will develop. This significantly reduces the investor's costs. As a rule, the margin ties up less capital than a direct investment in the CFD underlying and so the investor has more capital available for other trading positions.
Thanks to the lever effect, the amounts the investor can move are larger than those he is required to invest. While the shareholder only ever invests the equivalent of his shares, a CFD allows him to move multiples of this amount.
The potentials of CFD trading are a particular argument that is convincing more and more investors of this class of securities. While an equity investor achieves gains only if his shares rise and suffers a loss if the price falls, a CFD allows him to profit even if the share price declines - providing his has previously backed the CFD concerned. The high degree of flexibility created by these potentials help the investor implement more complex strategies on the capital market, since he is also able to make profits on the bear markets. In addition, he can hedge against price losses.
CFDs can also involve major price losses and the investor may have an unlimited call liability. The mentioned lever effect of CFDs works in both directions: If the price develops contrary to the investor's expectations, the corresponding losses are also disproportionately high. If such losses exceed the amount of the capital provided on the CFD account to secure open CFD positions, the investor has to contribute additional funds to restore the security. If the investor is unable to provide these funds, or fails to provide them in due time, the bank shall be entitled to close his open CFD positions. To be very clear: The loss risk is not limited to the original investment, it can also involve other assets of the client.
It is therefore evident why CFDs must usually be assigned to the same risk class as warrants and leverage certificates. This simply means that such instruments, due to their higher than average risk (which is in turn also the reason for their higher than average profit opportunities), should be offered only to experienced investors or to investors who are well-informed and aware of this risk.
Yet this creates a dilemma for the novice CFD trader: How can he gain experience if he has not explored the issue so far?
FXFlat means first-class, modern online trading under top conditions.
FXFlat offers the investor the huge potentials of attractive Forex and CFD securities trading, as well as access to other important capital markets. Previously, these markets were reserved for large banks, hedge funds and professional securities dealers and were not open to private investors.
FXFlat Bank was founded in 1997, and has been BaFin-regulated ever since. So investors entrust their money to a renowned brokerage that satisfies the highest requirements for transparency, technology and service.
FXFlat allows its clients to trade 24-hours a day, offers innovative order types and creates for them various mobile access potentials so they can be active on the market at all times.
FXFlat clients enjoy a first-class service that comprises not only 24-hour support, but also a broad range of seminars and webinars from which clients can draw on the skills and knowledge of experienced CFD and Forex traders.
What are the costs for CFD trading with FXFlat?
Anyone trading CFDs at FXFlat can rely on affordable and transparent prices. Of course, you pay for the spread, meaning the difference between the buy and sell price, but there are no other trading costs for trading with CFDs.
In addition, there are no financing costs for all positions that are opened and closed within a day. For all positions, both long and short positions held overnight, you pay a small financing fee according to the current market situation.
You can hold your CFD positions for days, weeks or months, but you should consider the conditions for holding overnight positions for longer periods.
Find out all prices & conditions - Account management fees, payment transactions, dividends etc. for Forex and CFD trading.
CFD product range
FXFlat offers a diversified range of tradeable CFD products on several underlyings.