What are CFDs

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CFDs are defined "An arrangement made in a futures contract whereby differences in settlement are made through cash payments, rather than the delivery of physical goods or securities."

CFDs are an easier method of settlement because losses and gains are paid by cash. CFDs provide investors to speculate with all the benefits and risks owning a security without actually owning it in the equity market, commodities; etc. CFDs are traded over-the counter (OTC).

For example, instead of purchasing 1000 shares of Microsoft from a stock broker, a client could instead buy a CFD on Microsoft on the OFB provided trading platform. A $5 per share rise in the price of Microsoft would confer to the client a $5000 profit, just as if he had purchased the actual shares that are traded on the exchange. A major difference is that there are no exchange fees and many of the inefficiencies of trading the underlying shares on the exchange are eliminated. OFB can therefore offer CFDs with very attractive margin requirements.

To read more about benefits of CFDs click here