A Contract for Difference (CFD) is a financial derivative that allows you to speculate on the price movements of various financial markets such as stocks, indices, commodities, and forex pairs without owning the underlying asset.

CFD trading involves entering a contract with a broker to exchange the difference in value of an underlying asset from the start to the end of the contract. You can profit from both rising (long position) and falling (short position) markets.

• Leverage: Trade on margin, using a fraction of the trade’s value.
• Flexibility: Speculate on price movements in either direction.
• Short-term: Typically conducted over short periods.
• Risk and Reward: Potential for amplified profits and losses.

Leverage allows you to control a large position with a small initial deposit. For example, with a 10% margin, you only need to put up $100 to control a $1,000 position. While leverage can magnify profits, it also increases potential losses.

A CFD account enables you to trade on the price differences of underlying assets using leverage. It requires an initial deposit (deposit margin) and ongoing equity to cover potential losses (maintenance margin).

To open a CFD position, you decide the number of contracts to buy or sell. Profits or losses depend on the price movement of the underlying asset relative to your position.

The primary cost is the spread (the difference between the buy and sell price). Some brokers may charge commissions, but at Fusion Capital, we do not charge commissions for opening or closing trades. Additional costs may include overnight funding adjustments for positions held overnight.

You can trade CFDs on shares, indices, ETFs, commodities, and currencies, among others. Fusion Capital offers access to thousands of CFD assets across various markets.

Margin trading involves borrowing funds from your broker to trade larger positions than your initial capital allows. It includes:

• Deposit Margin: The initial amount required to open a position.
• Maintenance Margin: Ongoing equity required to keep positions open.

Profit and loss are determined by the number of contracts and the price difference between the opening and closing prices.

Most CFD trades have no fixed expiry date and can be closed by placing a trade in the opposite direction. However, holding a position overnight may incur an overnight funding adjustment.

• Stop-loss and Take-profit Orders: Automatically close positions at predetermined profit or loss levels.
• Hedging: Protect your portfolio by opening positions that offset potential losses.
• Negative Balance Protection: Ensure your account balance does not fall below zero.

Negative balance protection ensures that your account balance cannot go below zero. If the market moves significantly against your position, Fusion Capital will close the affected position to protect you.

A margin call occurs when your account equity falls below the maintenance margin requirement. You will need to top up your balance or close some positions to reduce exposure.

Yes, you can open a demo account to practice CFD trading without risking real money. When you’re ready, you can add funds to create a live trading account.