How does CFD trading work?

When engaging in CFD trading, you enter into a contract with a broker to exchange the difference in the value of a financial asset between the time the contract is opened and when it is closed. It’s crucial to understand that in CFD trading, you don’t actually own the underlying asset; instead, you’re speculating on its price movement.

Is CFD trading legal?

CFD trading is legal in many countries. In many countries, CFDs are the primary method of trading short-term price movements. However, there are certain characteristics associated with CFDs that mean they are not permitted in certain territories.

Are CFD brokers regulated?

The CFD industry is not highly regulated. A CFD broker’s credibility is based on reputation, longevity, and financial position rather than government standing or liquidity. There are excellent CFD brokers, but it’s important to investigate a broker’s background before opening an account.