In CFD’ trading, the settlements are made through cash payments. It gives the customer considerable benefits over conventional share dealing. Major advantages of CFD (Contracts for Difference) are:

Gearing: Customers can open a position without having to put up the full underlying value.

So long or short: Customers can sell or buy any share that they quote, to profit from rising or falling prices

Immediate dealing: There is no irritating wait for an execution.

Interest and Dividend Adjustments: CFDs have no fixed expiry date, providing customer the freedom to close his position when he decides. As the customer position remains open, his account is credited or debited to reflect dividend and interest adjustments.

Long positions: The account is debited to reflect interest adjustments and credited to reflect any dividends.

Short positions: The account is credited with interest adjustments and debited to reflect any dividends.

For more details, see the CFD benefit page.

CFDs are not appropriate for long-term positions. If you are long, you have to maintain the position daily and it costs money. So CFDs become expensive. If you are short-term, you get the markets right however you will be prepared at some economic stage to cut the position.

Click here to see how a CFD works is through an example.

This information provided by Orient Financial Brokers (OFB) which conducts brokerage in Foreign Exchange, Commodities and Money Markets in the Middle East. OFB offers 24 hours internet on-line trading service to deal in thousands of financial instruments like Commodities, Treasuries, Share CFDs, Stock Index CFDs, Foreign Exchange and Precious Metals through its principals.