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CFDs

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CFDs, Spreadbetting and FX involve a high level of risk and you can lose more than your original investment. It is not suitable for everyone so please ensure you understand the risks involved.

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A contract for difference, or CFDs, are a type of financial derivative where two parties enter into… click below to read more

a contract speculating on whether the underlying instrument will increase or decrease in price. If a trader or investor ‘buys’ the underlying and the instrument increases in value, the seller must pay the difference between the current value and the value at the contract’s end to the buyer. If, however, the underlying instrument decreases in value the buyer must pay the price difference to the seller.  In essence, the buyer is taking a long position while the seller is taking a short position.

When CFD trading, you can act as either a buyer or seller, depending on whether you think the underlying will rise or fall in value. If the underlying falls in value after you have sold the asset (that is, taken a short position), you would make money. If it were to rise in this instance, you would lose money.

The ability for investors to take part in the market place, without requiring ownership of an asset, has led to the increasing popularity of CFDs with investors. As a leveraged product, they can be traded with only a small percentage of the amount needed to enter into the contract. Investors are able to hold a much larger position than their capital would otherwise allow, which has the ability to amplify gains as well as losses. It allows investors to speculate on instruments that they would not otherwise be able to include in their portfolio.

The simplicity of the product, which affords access from investors of all levels, has also contributed to its increasing popularity.

Contract for difference are quoted with two prices. The bid (sale price) is first, then the offer (purchase price).

For example, consider stock X, which is quoted at 9/10.

Long positions:

Long positions are taken when you believe the stock will increase in value.

If a buyer purchases 100 equity CFDs of company X, he will pay £10 per share. While this would amount to £1000, the buyer only needs to put up a percentage of that (depending on the required margin percentage). For instance, if the margin percentage is 5% the buyer will need £50 to open the position. A commission will also be charged.

If the price has increased, the buyer may choose to close the position.  If the new quote is 11/11.5, the buyer will now sell at the bid price of £11 per CFD. He will receive £1,100, or a £1 gross profit for the CFDs. The buyer may also choose to keep the contract open, if he believes the underlying asset will continue to increase in value.

Short positions:

The investor will sell 100 CFDs for £11 per share, amounting to £1,100. Required margin, using the same 5% is now £55. If stock X has fallen, the seller may choose to close the position. This will require buying the same number at a lower price. If CFDs for stock X are now quoted at 9/10, the seller will buy 100 contracts at £10 to close the short position, and make a £100 gross profit.

In the early 1990s, contract for difference were used almost exclusively by hedge funds and institutional traders in the United Kingdom. Now, they are now used in many markets around the world, and can be created based on many different types of underlying assets. In the above example, “X” may in fact be a share, an index fund, a commodity, interest rates or bonds. As they are over-the-counter (OTC), contracts can often be specified to the particular wants and needs of an investor.

Three distinct methods of CFD trading:

1. Through a market maker, who will define the terms of the contract including include the margin rates and underlying instrument. The market maker is also known as the provider.  This is over-the-counter (OTC), meaning trading is done directly between two parties.

2. Through a Direct Market Access model (DMA), where the contracts are more closely based on the underlying instrument. This is still technically OTC, but has significant pricing benefits.

3. InAustralia, CFDs may also be traded on an exchange. At Accendo Markets, we offer both DMA and conventional OTC.

As with any financial instrument, there are certain risks associated with this type trading. Primarily, these include market risk, liquidity risk and counter party risk.

Although volatility is often sought after by traders of CFDs, market risk also results from market volatility with the potential for an underlying asset of a CFD to drastically alter in price. However, stop loss orders may help control risks associated with the volatility of the underlying volatility. A stop loss order will trigger the actions to close the contract if the asset falls below a certain price. Of course, if CFDs are not available in the market at the price, the order cannot be filled which is referred to as ‘slippage’ or ‘gapping’. This risk can be mitigated by using guaranteed stop-losses, which guarantee you a worst-case-scenario price.

The market most closely resembles the futures and options markets, but with several differences. Unlike options and futures, CFDs do not have an expiry date. Rather, it is up to the investor to choose when to close the contract. Another difference is that CFD trading is primarily done outside of an exchange.

The main advantages of this type of trading include:

* Access to underlying market without needing to own specific instrument, available on several instruments, and across nations.

* Ability to trade on margin and create leveraged positions. This offers investors the opportunity to increase profits, but also increases risk.

* Low transaction costs. Most providers operate through a commission.

* High levels of personal control, because you are able to trade both long a short, and trade outside of regular exchange hours in some markets.

* Market is highly transparent.

* No time limit on positions. As the investor, you choose when to close a position. One should note that a CFD can be an open contract for long period of time, but is more commonly used as a short-term instrument.

* CFDs offer hedging opportunities to increase safety of overall portfolio Accendo Markets has its own unique trading platform, providing a simple user interface, live pricing, current open positions, trading tools and charts, and live news feeds. These attributes allow you to take advantage of the many opportunities provided. As an Accendo Markets client, you will be able to use the Puredeal DMA platform. You will also have access to information and analysis provided by Accendo Markets’ analysts provided to help increase your knowledge of trading strategies, tips and trading tactics.

CFD trading and spread betting are both popular trading products in the UK. Both are derivatives which provide the holder with exposure to an underlying market, such as shares, share indices, commodities or currencies. In recent years, the market has seen an increasing number of UK investors learning how to trade online.

Contract for difference are favoured over spread betting by experienced and professional traders as they provide pricing benefits over spread betting; Direct Market Access (DMA) is available. This means that the trader/ investor can access the ‘real’ underlying market to benefit from the tightest market spreads, and also act as a ‘price maker’ by placing orders on the stock exchange’s order book.

DMA, by contrast, is not available to spread betting traders. Some providers offer indicative level 2 data, but this doesn’t provide the pricing benefits that DMA trading offers. Not all providers offer DMA. To trial DMA trading with Accendo Markets, visit our demo account application page.

Of course, spread betting remains very popular in theUK. This is largely due to the tax benefits and simplicity of trading. The novice trader can gain access to underlying markets, using leverage, for as little as £1 per point. To trial the spread betting  platform, visit our spread betting demo application page.

Our offering is extensive. You can trade shares, commodities, indices and currencies, including:

* Large cap shares via FTSE 350, NYSE, Nasdaq, European and Australian contracts

* Many other global shares

* A large range of CFDs on shares with smaller market capitalisation, subject to availability

* Gold, silver, wheat, oil and a vast range of other commodities

* ETFs

* All major and exotic currency pairs

* All major and exotic stock indices, including the FTSE 100, Dow Jones, S&P 500, Dax, CAC 40 – plus many more

CFD trading means that you gain indirect exposure to the underlying market on a leveraged basis. All of the markets on offer can be traded online via your trading platform, at the touch of a button.

Any Questions?

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CFDs, spreadbetting and spot FX are leveraged products & can result in losses exceeding your initial deposit. They are not suitable for everyone, so please ensure that you understand the risks.
The value of shares can go down as well as up, so you could get back less than you invest.

Telephone calls and online chat conversations may be monitored and recorded for regulatory and training purposes.

* We provide these as underlying assets to CFDs and Spreadbets.

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Accendo Markets Ltd - 1 Alie Street, London, E1 8DE (UK) Telephone: 020 3051 7461 - Accendo Markets Ltd. is Authorised and Regulated by the Financial Conduct Authority (FCA) No. 475285. Accendo Markets Ltd. Registered in England and Wales No. 6417051. © Copyright Accendo Markets Ltd 2015. All rights reserved.
EXCELLENT

4.83 Average

147 Reviews

Mrs. J

"Our Trader, Aymen Azizi, has been nothing but attentive to our every need throughout our long relationship with him. No issue is too small, full explanations on all our questions."

Posted 3 weeks ago

Brian R

I have been with Accendo for a long time now, ten or twelve year's, probably more . As I told Sam (my trader) I thought that CFDs were better than sex . I stopped trading for a few years and only started back about a couple of months ago. But it is as if I had never been gone , so to speak. Sam has helped me every step of the way, at my age one forgets things. I have only praise for Accendo and as far as I am concerned the platform is the best . Now I am back trading at 71 years of age, I might even try sex again. Brian Robertson.

Posted 1 month ago

Jim W

I understand how to make a profit with CFDs. I am restricted by the range of companies I have knowledge of. Although, I am not sure that is a big problem. Tom Robertson is a very fine man.

Posted 3 months ago

Rebekah S

Well, I would not be trading without the help of my trader, Sam Alnakkash. He provided a really great overview of Accendo Markets, an insight into trading in general and how to get started in trading online. His advice, support and training has been fantastic all along the way, enabling me to start trading earlier than I would have done had I not had the support. He has also been very adept at understanding me as a client in order to help me achieve my trading goals. I still have a lot to learn and hope I will get there.

Posted 3 months ago

Nick z

I like the updates on shares I trade. Updates from Bloomberg and Reuters plus industry updates and breaking news. I've had Matt Grice and James Abbott and found both to be excellent. I would like to continue a personal service with James. He understands how and which stocks I trade.

Posted 5 months ago

Steve O

Excellent, knowledgable broker interaction and communication, coupled with very good research and analysis.

Posted 5 months ago

William P

Being new to direct trading I needed help and was given all the time and advice that I needed to feel fully able to make decisions on what I wanted to invest in. I asked for and got exactly the type of info I required provided by Tom Cook, who I would recommend to anyone looking for help.

Posted 5 months ago

Mr. W

I have been dealing with accendo for the past 8 years my broker Amrit I find him very helpful when he is there lol and had many offers to change but will not do it Bill Roberts

Posted 5 months ago

Zoran N

Very good all round service! Timely market information. (charts + trends coverage ) On the ball accounts managers ,quickly available and alert . Part of my success owed to my personal manager Mr Sam Springet , than you.

Posted 5 months ago

Mr Brian C

Easy to deal with.....

Posted 5 months ago

Muhammed S

Accendo markets are great for trading cfds and their research is second to none! Aymen manages my account is extremely helpful and always keeps me updated on market info. Thanks again

Posted 5 months ago

Mr Buta B

Always available, whenever I call I get straight through to someone that can and will help. The staff are very knowledgeable, helpful and easy to talk to.

Posted 5 months ago

Stephen B

Aymen Azizi keeps an eye on what is happening in the market and informs me with timely relevancy, email call, and txt.

Posted 5 months ago

Mr. G

the web site is so easy to use and Aymen my point of contact provides exactly the right level of intervention

Posted 5 months ago

Jyotish G

Very good info and continuous support from Aymeb

Posted 5 months ago

Chander S

The personal service of my dedicated broker is excellent. I do get daily mails on market conditions and information of future ex dividend dates of Stock by accendo Market, which is helpful to make a decisions on buy or sell stock. the whole concepts helps in to play with some money, risks and rewards in this share Market world, which makes me happy if and when I make any money,

Posted 5 months ago

Dilip P

My account manager Aymen has provided unbiased professional advice since day one. He allows me to trade at my own pace and is not pushy at all unlike most other brokers. Aymen is an extremely valuable asset to his Company and I would highly recommend Aymen and Accendo Markets.

Posted 5 months ago

DAVID P

Having an individual on call to help me, as a complete novice gives me the confidence to try trades to see what happens. The platform is very easy to use.

Posted 6 months ago

Frith L

Whenever I have a query Accendo are always willing to help out with a patient answer. I especially mention Tom Robertson here whose valuable help has aided me in charting new waters. I really appreciated his call when a share of mine was doing well. Keep up the good work all.

Posted 9 months ago

John F

pleasant people who know what they are talking about and i have had much help and information from adam vettese who answers every one of my questions in format that i understand , a great company, i am very pleased.

Posted 9 months ago

Thomas J

They have an easy to understand the platform.The staff member who I deal with{Matt Grice}is on the ball and keeps me up to date with the latest news and information that is relevant to the share that I have an interest in.

Posted 9 months ago