miniCFDs are CFDs - made easy
What's a CFD?
A Contract for Difference (CFD) is an agreement between the client and the provider to exchange, at the close of the contract, the difference between the opening price and the closing price, multiplied by the number of shares specified within the contract. CFDs are mainly based on equities or equity indices.
Like other derivatives, CFDs are financial products designed for those who want to benefit from the price movements in an underlying cash market without needing the various rights that go with ownership (voting rights etc).
Long or Short
You can benefit not only from rising share prices but also falling share prices. If you take a long position (ie buy) and the value of the share goes up you will make a profit and conversely if you take a short position (ie sell) and the value of the share falls you will also make a profit. However, if your view turns out to be wrong, you would of course, make a loss.
As CFDs are traded on margin (that is you put up a margin, or deposit, which can be as little as 10% of the contract value), you pay less up front or, put another way, it means that you can take a larger position.
For example if you deposit £100,
you receive, effectively, control over £1,000 of shares, for example. Your £100 provides cover, in case there is a sharp movement against your position - it means that we, and you, have some 'margin' or protection for a potential loss that may occur in a single day's trading.
Open - ended
Uniquely, CFDs do not have an expiry date and can be kept open for as long as you like providing there is sufficient money deposited to support the margin.
How is a miniCFD different?
miniCFDs are exactly like a CFD but:
- can be traded in mini sizes ie smaller contracts (100 shares for UK stocks and 10 shares for US and European stocks)
- the minimum deposit required (£100) to open an account is lower than other CFD providers
- there is no minimum commission on trades
- is traded online
- A Trading Academy is automatically offered to all new clients for the first five weeks
miniCFD trading carries a high level of risk to your capital. Only speculate with money you can afford to lose. miniCFD trading can be very volatile. Prices may move rapidly against your interests and resulting losses may require further payments to be made. miniCFDs trading may not be suitable for all customers; therefore ensure you fully understand the risks involved, and seek independent advice if necessary.