CFD is a contract for difference between two parties, a broker and a trader to exchange the difference between the opening and closing price of an underlying asset like a share or other. The result will either be profit or loss of the trader. Profits can be made either on the falling or the rising markets since the trader does not actually own the share. CFD trading at https://www.xtrade.com/ is now popular among the investors as they are free from the hassles of owning a share and holding them.
CFD trading – how it all started
CFD trading via CFD trading platforms is relatively a new concept and it was first started in the 1990’s. In the last decade it saw an incredible growth and now is a popular way of trading amongst the investors. CFDs were first started in London- UK by a firm called Smith New Court and was later bought by a famous company Merrill Lynch. CFDs were useful for the hedge fund clients of Smith New Court who were looking for a way to short sell the market using high leverage to place large bets. It gave these clients the ability to avoid the stamp duty similar to London stock exchange members.
Until the technology boom in the late 1990’s arrived, this was the main market of CFDs. The technology brought a new and large population of new and volatile stocks that were perfect for CFD trading. The rate at which the prices were changing for these stocks allowed traders to speculate on the direction of the stock prices using this new technique of trading CFDs.
GNI was the first company which brought CFDs and CFD trading platforms to the individual traders through the creation of an online trade system called GNI touch. This application allowed the individual traders to speculate on the London stock exchange prices without having a direct access to it.
More CFD Trading Platforms And More Users
Now more 25 percent of England’s stock market turnover is related to CFD trading. Now due to easy availability of the online CFD trading platforms provided by many online CFD brokers, the popularity of CFD is growing rapidly. Investors are continuously becoming aware of this new system of trading and due to its many advantages, more and more individual traders are attracted by the newer way of trading. Therefore, a large number of CFD trading platforms is being offered.
CFD provides a cheaper way of trading on large amounts of underlying assets without taking the burden of actually owning the asset and buying and selling it. The CFDs have eliminated the requirement of accessing the live markets in order to perform speculation on the direction of movements of prices of the underlying assets. Availability to trade in multiple markets from a single CFD account is another advantage which is liked by the investors.