Cfd trading what is

CFD or Contract for Differences involves a buyer and a seller settling the differences between the current and initial value of an asset at the end of the contract period.

CFD trading what does it mean?

An investor thinks that the price of a company’s stocks will rise in the future. He plans on buying 1000 stocks at $10 each translating to $10,000. As CFD involves margin, so his CFD broker charges only a certain percentage of the amount say 5%. With 5% amount or $500, he holds a position of $10,000.    

After a certain period, the cost of stock rises and is now at $12. The total amount becomes $12,000.

The investor makes a profit of $2000 which is the difference that CFD stands for.  

Likewise, investors can also capitalize on the decreasing price of a stock. If an investor thinks that the price of stocks will go down in the future, then he can also purchase CFD on it.

CFD not only works with stocks, but also with indexes, currencies, and commodities. Commodity futures trading can also involve CFD and offers products like gold, silver, aluminum, platinum, copper, palladium, nickel, zinc, and others. Additionally, agricultural products like coffee, sugar, corn, cocoa, and wheat are also tradable with CFD.

Apart from commodities, CFD also trades with foreign currencies on MetaTrader platform like Forex.

Trading Hours:

Another question that might arise with traders regarding CFD trading what is the trading hours?

CFD trading hours vary according to the brokers and types of the products.

Currency Pairs -

All major currency pairs are traded between 22:05 to 21:55 throughout the weekend.

NOK (Norwegian krone) based currency pairs are traded between 22:15 to 24:00 and 00:00 to 21:57 through Sundays and Thursdays.

PLN (Polish zloty) based trade take place from Sunday to Thursday at 22:15 to 20:57 and 00:00 to 21:57. The trades also progress on Fridays from 00:00 to 21:55.

SEK (Swedish Krona) based currency pairs trade from 22:15 to 24:00 and 00:00 to 21:57 through Sunday to Thursday.

Agricultural Products -

Questions arise alongside - CFD trading what does it mean, is the trading hours of Agricultural products. Agricultural products though only traded on weekdays differ in time:

  • Cocoa - 09:46 to 18:29

  • Sugar - 08:31 to 17:59

  • Coffee - 09:16 to 18:29

  • Cotton - 02:05 to 19:15

  • Soybeans, Rice, Corn, and Wheat - 01:05 to 13:40 and 14:35 to 19:10

Energy 

Brent Oil trades happen on Monday to Thursday between 01:01 to 23:00 and on Fridays from 01:01 - 20:55.

Natural Gas, Heating Oil, and Crude Oil trades happen through Sunday to Friday between 23:01 to 24:00 and 00:00 and 21:55.

Metals 

Aluminum and Zinc trades take place on weekdays from 01:05 to 17:55.

Gold, silver, platinum, palladium, and copper trades from Sunday to Friday between 23:01 to 24:00 and 00:00 to 21:55

People having the question - CFD trading what does it mean and what are the trading hours can get a clear idea about it from the above information.

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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