CFDs are a significant financial innovation

CFD is a contract between two parties to exchange the price difference of an underlying asset between the opening and closing of the contract in cash. CFDs are a significant financial innovation in the design of futures contracts. Their use of hedge funds and retail traders has grown rapidly in recent years around the globe. CFDs are a futures-style contract which enables traders to take short positions.  while you trade CFD you do not own the traded asset, you just use the price fluctuations of that asset in order to speculate. CFD Trading is on a margin, which means the trader has full exposure to the underlying asset by investing merely a small proportion of the real size of the position. A CFD broker who quotes low prices will attract mainly buyers  Conversely quoting high CFD prices attracts sellers. In practice, some CFD brokers simply “pass through” CFD orders from customers as buy/short sell orders directly to the physical market on their own account to ensure a hedged position, thereby linking CFD prices quoted directly to the underlying. This is referred to as Direct Market Access (DMA).

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