A CFD is a contract between two parties to exchange the difference in the value of an asset between the date of entering the contract and its termination. The two parties are referred to as the long side, which profits when there is an increase in value or the short side gains when there is a decrease in value.
Contract for Differences is a financial instrument that requires no margin call at any time during their life cycle, thus mitigating counterparty risk. They also do not have any minimum capital requirement, allowing you to trade with small initial deposits instead of putting down more significant amounts for standard futures contracts.
What can I trade in Dubai Financial Market?
Many products are listed on DFM, including stocks, indices, futures, and options. In particular, DFM offers a range of CFD contracts on Dubai Financial Market-listed equities, including DP World DPW, +1.96% Emaar Properties EMAAR +0.54%, Emirates NBD ENBD +2.60%, Arabian Centres APIC +1.76% and the DFM General Index DFMGI.
What is a CFD traded at Boursa?
Contracts for Differences (CFDs) are agreements between two parties to exchange the difference in value between an asset’s entry price and termination price over a given period, as mentioned in the contract.
Under this agreement, one party agrees to pay another any variation in the underlying asset’s market price from its entry price to termination price.
The CFD contract is traded over-the-counter and allows the trader/investor to buy or sell their position before the maturity of their contract instead of owning the asset itself.
Boursa provides a CFD trading platform with a choice of trading styles, simple or advanced, so each investor can choose a style that suits them best while enjoying a wide range of services and tools.
Through Boursa online Trading Platform, investors can trade in more than 50 different stocks across Equities, Indices, Currencies and Commodities. Investors also have access to numerous educational resources such as live webinars, eBooks for technical analysis and market news through our website.
Some Benefits of CFD Trading on Boursa:
- Access to more than 50 global stocks and indices through CFDs such as Nokia (NOK), Apple (AAPL), Google (GOOG, AAPL), Facebook (FB) and Twitter (TWTR).
- No minimum initial deposit is required ($1 for most stocks)
- Minimum investment per trade ($10 per contract) with a maximum exposure of $5 million
- There are no leverage limits for retail clients: up to 200:1 is available for most stocks & indexes. Professional traders can access higher leverage per trade.
- Free real-time data with 100% streaming coverage from the Dubai Financial Market, London Stock Exchange and NYSE MKT
How do I trade CFDs?
To trade CFDs in Dubai, you first need to open an account with a broker that offers CFDs.
The broker will require some verification information, such as proof of identity and proof of address, before allowing you to trade on margin using their platform.
You will need to transfer money into your account – this is the money you will use to fund your trading activities and make a profit if your trades go in your favour.
Two ways to trade CFDs: a simple or an advanced order type
The simple order type is the most common way to trade CFDs as it is easy to use and requires no prior knowledge of the market.
Using the simple order type, you need to navigate to the “Place Order” tab and select your market instrument, quantity, lot size and then place the order
With an advanced CFD order type, you have more options at your fingertips when placing orders on your markets.
The advanced order types allow for more complex trading strategies with greater flexibility in terms of time frame for execution, price or quantity conditions and also-trading capabilities, among others.
It is recommended that beginners start here with a simple order type that is easy to use while familiarising themselves. A trading platform without too many additional complexities added into their trades.