RISK WARNING NOTICE
Before trading Contracts for Difference, Spread Bets or Foreign Exchange (ForEx or FX), ensure you fully understand the risks involved. These products may not be suitable for all types of investor. Trading in Contracts for Difference / Spread bets / FX carries a high degree of risk and is generally considered suitable only for the more experienced investor. Leveraged products carry a high degree of risk for your capital, and in some circumstances you may be liable for a greater sum than your initial capital invested. Past performance is not necessarily a guide to future performance. Seek independent financial advice if necessary. These products are suitable only for people over the age of 18. Information and analysis produced by Pretium Securities Ltd does not constitute a recommendation or offer to make a transaction in any derivatives or securities, and is intended to be general in nature. Pretium Securities Ltd is fully authorised and regulated by the Financial Services Authority.
The past performance of any investment is not necessarily a guide to future performance. The value of shares or income from them may go down as well as up. The value of shares may rise as well as fall due to the volatility of world markets, economic conditions/data and/or changes in the rate of exchange in the currency in which the investments are denominated. You may not necessarily get back the amount you invested. If you are in any doubt about investment, you should seek independent financial advice
 
What is a CFD?
A CFD (or Contract For Difference) is simply an agreement to exchange the difference in value of a particular share between the time at which the contract is opened and the time at which it is closed.
The new, flexible way
 
  CFD trading is very similar to normal share dealing in two respects. You deal at the cash price of the share, and pay a commission which is calculated as a percentage of the value of the transaction. Our commission rate for UK and other major shares is just 0.2% (see Contract Details). When you open a position, however, you do not have to pay for the full value of the shares.

When you close your position, the difference between your opening contract value and your closing contract value is realised. So just as with buying shares or trading futures, the degree to which you are correct in your CFD trading affects how much you make or lose.

When you close your position, the difference between your opening contract value and your closing contract value is realised. So just as with buying shares or trading futures, the degree to which you are correct in your CFD trading affects how much you make or lose.

One key benefit of trading CFDs is that you do not incur any stamp duty, as you are not making a physical purchase.

Contracts for Difference (CFD or CFDs) are undoubtedly one of the most exciting new products to be made available to the individual investor in recent years. You probably already know a lot about CFDs and the benefits that they offer over physical stock trading: CFDs do not attract stamp duty; and, you can take a positive or negative view on Stocks, Indices, FX and Commodities across global markets.
 
Timeframe
As with shares, you can buy or sell a CFD whenever you wish. You can choose to hold a position for months or merely a few hours.
 
No Stamp Duty
CFDs offer no shareholder voting rights, no certificates and you pay no stamp duty (0.5% under current UK legislation) or any safekeeping or custody fees