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Contracts for Difference (CFD)

Contract For Difference often abbreviated to CFD's is a contract to exchange the difference in value of a financial instrument (quoted in the underlying market) between the time at which the contract is opened and the time that it is closed. The ability to achieve profit in a falling market is one clear advantage of CFD trading when traders can take short positions in an underlying investment. This ability to trade in both rising and falling markets adds flexibility to your CFD trading strategy and allows you to forecast price movements that coincide with the underlying fundamentals, which can fluctuate in both positive and negative directions.

Molton Wealth Financial Services will often use CFD's to hedge a client's position. For example, if you have a long position on a stock that is making losses, you can open a position in the opposite position using a short CFD. This might seem redundant to some, but it will have the effect of balancing losses, as the short position will start to make gains if prices continue in a downward direction. This ‘hedge’, will thus allow you to limit risk and prevent future losses.

Often investors, use CFD's for tax purposes as they can by taking a short CFD they do not need to sell the underlying investment. This is important when you have exceed your capital gains tax allowance in any given year.

At Molton Wealth Financial Services we have a variety of trade sizes available which can be used for various trading styles or types of investment account. Your wealth manager will be happy to assist you in this area on the market.

How to apply

You can call Molton Wealth Financial Services directly on +44 (0)20 3874 4495 or email and request a call back.

Get in touch with our team

Call us: +44 (0)20 3874 4495 Write to us: info@moltonwealth.co.uk

Molton Wealth Financial Services is a trading name of ABS Broker who are authorised and regulated by the FCA (Financial Conduct Authority) regulation number 584368 and is also a member of the London International Financial Futures and Options Exchange. The information contained within this website is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK.