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Understanding Futures and CFDs


Obaid

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I want to fully understand Futures and CFD

 

Where are Future contracts traded, on which stock exchange ? Who are the parties entering these future contracts ? 

Whether these are the future contracts we are offered on Margin when we trade through CFD or they are price speculation agreement on Future contract prices ?

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4 minutes ago, Obaid said:

I want to fully understand Futures and CFD

 

Where are Future contracts traded, on which stock exchange ? Who are the parties entering these future contracts ? 

Whether these are the future contracts we are offered on Margin when we trade through CFD or they are price speculation agreement on Future contract prices ?

For Futures, CFDs and Spread Bets you are trading the brokers own market who base their prices on the underlying market. Futs, CFDs and SBs are leveraged products and so all need a margin comitment to trade them.

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22 minutes ago, Caseynotes said:

For Futures, CFDs and Spread Bets you are trading the brokers own market who base their prices on the underlying market. Futs, CFDs and SBs are leveraged products and so all need a margin comitment to trade them.

So in simple words..

 

Broker has a stock of Future Contract that he offer us to trade? 

 

If I make loss , broker will win ? if i win Broker will lose? 

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16 minutes ago, Obaid said:

So in simple words..

 

Broker has a stock of Future Contract that he offer us to trade? 

 

If I make loss , broker will win ? if i win Broker will lose? 

No, IG net off inhouse shorts and longs, then any excess is hedged.

So if you are long IG takes a corresponding long position in the underlying market, if you win they win, collect the win and hand it to you. 

They still make a profit because they get a better spread than they give to you.

But the main advantage all round is that they won't go bust if the market does something drastic.

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