Trade in any market condition and amplify your investment results with Contracts For Difference.
What are CFDs?
Contracts For Difference (CFD) are leveraged trading instruments written over existing underlying securities. The CFD allows you to control a position in a given security and gain exposure to price movements without having to fund the full value of the position. CFDs differ from HIN shares in that they can be long or short and the owner of the contract does not own the underlying security.
How do CFDs work?
Trading CFDs gives you exposure to price movements of underlying securities without having to own them. You may profit from underlying security price rises by taking a long position in a CFD.
Alternatively, you may also profit from a price fall by taking a short position in a Contract For Difference.
Make a Deposit
Make a small cash deposit, called an Initial Margin, that serves as collateral.
Create A Positon
Buy a CFD to open a long position or sell a CFD to open a short position.
Profit and losses accruing in real time as market prices fluctuate.
Close A Positon
Sell the CFD to close a long position or buy the CFD to close a short position.
CFD Trade Example
Consider the following example of Trader A buying 100 BHP shares on HIN and Trader B using a CFD:
Trader A buys 100 BHP @ 34.00 at a cost of $3,400. Trader A sells the 100 BHP @ 36.00 and receives $3,600. The $200 profit represents a 5.9% return on the initial $3,400.
Trader B buys 100 BHP @ 34.00 using a CFD. This costs 10% of the value of the position or $340. Trader B sells the 100 BHP @ 36.00 and receives the initial margin plus realised profit or $540. The $200 profit represents a 59% return on the initial $340.
Benefits of Contracts For Difference
Risks of Contracts For Difference
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Frequently Asked Questions
Cash or stocks are considered acceptable collateral when trading CFDs. To calculate value of a premium, multiply the quoted premium by the size of the contract. For example, if Rio Tinto’s option premium is quoted at $0.55, a single contract will be $55 ($0.55 x 100 shares per contract).
From the time you receive a margin call notification, you have 24 – 48 hours to deposit additional collateral. During times of rapid market movements, you may be required to provide additional collateral earlier. Should this be the case, Gleneagle Securities will notify you.
CFD trades can be placed by either calling up Gleneagle brokers directly or through our online webiRESS platform.
There is no minimum amount required to place a CFD order.
There is no minimum account balance required. However, you do need to deposit funds into your margin account in order to trade CFDs.