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How to Trade CFDs

Why are there two prices for each CFD?

In the same way as traditional trading, in CFD pricing there is a bid price and an offer price. These are the price levels that you can sell at – the bid price – or can buy at – the offer price.

If you anticipate that the price of an instrument like a stock index or a commodity will increase you open a buy (long) position with a view to exiting this position when the instrument has reached a higher price.

In the opposite case, if you anticipate that the price of an equity or a bond is likely to fall, then you open a sell (short) position with a view to exiting this if the price goes lower.

What does “sell” a CFD mean?

Sometimes people can have trouble understanding the concept of opening a sell position – or a “short” – wondering how can they “sell” something they don’t already own. It can be easier to consider a short position as a financial expression of your view that an instrument’s price will go down, rather than actually selling something.

What do the prices mean?

Our CFDs will be traded in the underlying currency of the symbol, unless otherwise specified on our market information sheet. For example, a CFD on the US Dow Jones equity index will be traded in US Dollars while a UK equity like Lloyds Bank will be traded in British Pounds.

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