CFD (Ccontract For Difference) is the abbreviation of contract for difference. The contract for difference is a relatively new financial derivative, which is currently only traded on stock exchanges in seven countries. Investors buy and sell at the price of a commodity, which does not involve the transaction of commodity entities. Theoretically, commodities with contracts for differences can be anything with floating prices, including national indexes, foreign exchange, futures, stocks, precious metals and other commodities.

CFD trading has many advantages:

1.？ There is a margin for the transaction of contracts for differences. The margin ratio ranges from 3% of the stock contract spread CFD to 1% of the index contract spread CFD. In this way, investors' capital utilization efficiency will be higher, because they only need to invest a small proportion of their total positions to conduct a transaction, and at the same time enjoy all the benefits and risks brought by market fluctuations.

2.？ Selling contracts for differences is the same as buying, because contracts for differences do not involve physical delivery. In this way, investors with contracts for differences have the opportunity to make profits in both bear markets and bull markets (short-term intraday market changes), and can also avoid the risk of bulls in the spot market.

3.？ Contracts for differences provide you with a way to conduct low-cost transactions with one account. The price difference of all indexes, industry indexes, bonds and commodity futures contracts is commission-free.

4.？ The contract for differences not only reflects the price changes in the physical stock exchange market, but also reflects the influence of the company's behavior on the price of the basic stock or index market. If the investor holds a contract for difference, the company will declare a dividend, and the investor's account will be adjusted on the ex-dividend date instead of a few weeks later. This means that the holders of contracts for differences in shares participate in stock split as if they actually own shares. The only difference is that with a contract for difference, you have no right to vote and no tax exemption.

CFDs has been in Australia for several years, and it is said that it will be traded in Hong Kong soon, but I haven't heard when it will be traded in Shenzhen Stock Exchange and Shanghai Stock Exchange.