What are CFDs

A Contract for Difference (CFD) is a contract between two parties. A buyer and a seller stating the seller will pay to the buyer the difference between the current value of an asset and its value at contract time.

On the SMC Trader your margin required is 10% for Stock CFD's and 5% for Index CFD's. CFDs are an equity derivative that allows investors to speculate on share price movements without the need for ownership of the underlying shares.

For example, A CFD allows you to control $100,000 worth of shares, whilst only investing $10,000 of your own capital. CFDs posses a great potential for upside profit however an equal potential for downside risk.

CFDs allow investors to take long or short positions, and unlike futures contracts have no fixed expiry date or contract size.

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