We have often heard the advice, “Don’t put your eggs in one basket”. Yup, this recommendation aims to minimize the risk to our assets, hoping that we do not place our assets in just one investment instrument.
Currently, there are many investment instruments available for the general public, from the capital market itself, there are stocks, mutual funds, bonds, and so on. All are available to meet the investment needs of the people. It will be a wise move if we allocate our assets to each instrument. If you still have any residual assets from the investment, you may want to try assigning them to a Contract For Difference (CFD).
CFD is a derivative product that allows you to participate in an underlying stock/index’s price movements without owning the company’s shares. CFD provides an opportunity to profit in both bearish and bullish markets because it allows both to sell short and buy long.
CFDs are traded on OTC, and the price obtained is derived from the underlying stock price.
A customer placing an order on the exchange will go through a hedging desk or CFD broker that will send it to the markets and reflect the trade on the exchange. For CFD shares, the price will be done based on the bid and ask prices. The second is DMA CFD or Direct Market Access CFD, where when a customer places an order, the order will be sent to the Exchange and traded based on the actual price.