CFD terminology-Understanding contracts for difference

Friday, October 8, 2010

There is a lot different terminology that a trader of the dispute must understand if we are going to get their head around all the information out there under contract for a different world.

If you are looking for a broker, development of strategies for understanding or self education, terminology (similar to lots of other disciplines) is the first step.

Here are some of the common terminology used in the contract for the world difference:

Shares of Blue chip: an organization considered as traditional, not technical. large, profitable and processed conservatively managed organizations. An established company.

Contract for difference: Contract for difference; a contract between two parties, the buyer and seller, which provides that the seller will pay to the buyer the difference between the current value of the asset and contract value. More than a similar to a future in this counter is liquid CFDs secondary derivative instruments that reflect the underlying assets in all its aspects and, therefore, can be exchanged for the close option and at any time before the expiry date, in the current market rate.CFDs reduce traders assets amount required and increases the potential for profit. See Overview CFD for a detailed description.

Gearing: also known as lever. the proportion of long-term capital of the company with a constant interest in total capital. A high gearing is generally considered very * speculative.

Compensation: its practical undertaking an investment activity in order to protect against the loss to another, e.g. sales short to defeat in a market which is downstream or purchasing much to offset a previous sale short.While hedges reduce potential losses, tend to reduce potential profits.

Limit orders: Instructions deal that define the minimum or maximum value that you want to buy or sell shares.

Small:"Short sale" or "short position" placing a trade if a trader believes that the market price.Originally from those who operate from the sale of a security that is not owned and therefore creating a short position in investor who goes short borrows the security of the traders to sell and then rebuys security at a later date and a lower price. the difference is the profit of the investor.

During counter: during the counter (OTC) represents a market in which security of transactions through a phone and computer networking resellers in stocks and bonds, instead of the Exchange.

Synthetic market: A synthetic market is a market that was created from your CFD Broker. Values are guided by the underlying assets, but the broadcast may be slightly different (as per the broker pricing policies), a market Synthetic, all transactions happen between CFD broker and Trader.


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