Contracts For Difference (CFDs)

 

CFDs enable you to buy or sell short shares of global companies, contracts on stock indexes, contracts on commodities and metals with the maximum possible leverage and savings on commission fees. Open an account with Renesource Capital, get the most favorable tariffs and trade more than 10 000 CFD!

CFD

Contract For Difference (CFD) provide the opportunity to trade shares, commodities, stock indexes and other assets without actual physical possession. CFDs reflect the movement of the underlying asset: a share (e.g. Facebook), a commodity (e.g. Brent oil) or a stock index (e.g. S&P500). CFDs are traded on margin, and profit/loss is formed by the price difference between the purchase and the sale prices. CFDs are also frequently used for protection against price/forex risks (hedging).

Main advantages of CFDs

Flexibility: the possibility to open both long and short positions (to sell short). Buying CFD (opening a long position) allows you to make a profit if the price/rate of an underlying asset goes up (a share, a commodity, a stock index etc.) and a loss if its price goes down. Vice versa, selling CFD (opening a short position) you can make a profit if the price/rate of an underlying asset drops or take losses if price/rate of the underlying asset goes up. Short sales of CFDs are more simple in terms of execution than borrowing shares (broker’s credit);

Transparency : prices/rates of CFDs are based on prices/rates of underlying assets (e.g. prices of Facebook or Google shares, price of Brent crude oil). Prices of CFDs are coming from the corresponding Exchanges of the underlying assets (e.g. from ICE for Brent crude oil or from NASDAQ for Facebook and Google shares). CFD spreads are similar to the original market spreads of underlying assets. The width of the market spread plays an important role in the financial result: the narrower the spread, the smaller favorable market movement needed to make a profit;

Renesource Capital offers to perform trades in CFDs on shares at Exchanges prices (DMA, direct market access) without any widening of market spreads.

Efficient application of capital: CFDs are traded on margin. To open a CFD position you only need to have available funds in equivalent of a small fraction of the trade amount as collateral. Collateral size is normally from 1% to 10% of the nominal amount of the trade. However, the required margin may be higher when underlying assets are less liquid. For example, if collateral is 2%, the Customer can deposit as little as 2000 USD on their financial instruments account and trade up to USD 100 000. In this case, the leverage is 1:50. Accordingly, potential profits of such investment will be much higher comparing to trading of traditional instruments (stocks, futures), but the risks of potential losses will likewise increase. Flexible system of collaterals allows to perform portfolio investments into other financial instruments at the same time (diversification).

CFD trading at Renesource Capital

  • Acess to trading electronic and voice;
  • Wide selection of trading platforms;
  • Extensive list of available CFDs;
  • Low commission fees and aggressive margin requirements;
  • No hidden commission fees.

Risk Disclosure Statement. Margin transactions (Forex, contracts for difference CFD, futures and futures options, stock options, REPO transactions, transactions in over-the-counter derivatives and transactions using broker credit, including selling short) involve higher risk. The level of risk increases with the leverage ratio. As the result of margin transactions, relatively high profits are possible with low level of initial investments, as well as significant losses which may exceed the principal amount of investments or the amount of the collateral. Please ascertain whether margin transactions in their essence and content suit the risk profile that was assigned to you by AS IBS Renesource Capital and whether the content of margin transactions corresponds to your investment goals.