TD Waterhouse - Contracts for Difference

TD Waterhouse CFDs provides an alternative method of trading shares without having to pay the full price of owning the stock. CFDs (Contracts for Difference) can be traded 'long' or 'short' to speculate on either rising or falling markets.

What is a CFD?

A CFD is a contract for difference. The contract is an agreement between a broker and a trader to exchange the difference between the share price at the opening and the share price at the closing of a particular trade, so resulting in either a profit or loss.

Instead of paying the full value of the shares you pay a margin, such as 5% or 10% of the actual share value, as a deposit. This means you can trade in larger amounts of shares than if purchasing the actual shares.

There is no fixed expiry date for a CFD trade, the trader closes their position when they wish to either collect their profits or cut their losses.

With CFD Trading you receive many of the benefits of share ownership such as dividends and price performance but you don't actually own the shares.

A CFD is a derivative product. A derivative is a financial product whose value is derived from the value of an underlying security, index, commodity or rate. It is a financial contract between a trader and a provider to exchange future cash flows.

Learn more about CFD trading on our website at www.tdwaterhouse.co.uk.