A CFD or a Contract For Difference is an investment product which allows traders and investors alike to trade a variety of assets such as Shares, Cryptocurrencies, Indices, Commodities and Bonds without actually owning the underlying asset itself. As a trader, you’re basically entering into an agreement which states that you will be profitable if the difference between the price you purchased the contract at and the price it closes at is in your favor.
As is the case with all investments, when you trade CFDs, you can lose all of your investment as well as gain. So, please take note of this before trading CFDs.
When it comes to trading CFDs, you’ll be hard-pressed to find a better CFDs broker than Absolut Ability. Why? Because here at Absolut Ability, we offer a truly wide selection of some of the very best CFDs available, and more importantly, we offer them with zero commission, no hidden fees and the lowest fixed spreads. We never charge any exchange charges and we don’t have to because you are buying CFDs. This also means there is no stamp duty to be paid either. When it comes to investing and trading CFDs, a lot of traders prefer them over other financial products as they’re easy to trade and allow you to diversify your portfolio without having to inject vast amounts of capital.
When you trade CFDs you don’t need to pay extra fees such as stamp duty, holding fees or commissions. Why? Because you don’t own the actual asset. Instead, what you’re doing is predicting if the closing price will be higher or lower than the opening market price you purchased the CFD at. In the next section, we’ll show you an example of how you make a profit by buying CFDs.
The CFDs Example
For instance, let’s say you purchase Apple Shares at $366.31 per share and you purchased 10 of them. This means that your initial investment is $3,663.10. If the Apple CFD Shares you purchased hit $500 per share, that means you stand to make $1,336.90 in profit. The same can be said if you predict that the share price will go down, which you can do if you short a CFD. If the price you purchased the CFD at is higher than the price you sell it for, you make a profit.
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