Contracts for differences are financial products derived from stocks, which contain high leverage effect. They are effective ways to buy and sell stocks, indexes and futures.
The London Stock Exchange has a history of 200 years. In 2000, Britain introduced the British stock contract for difference. By June 20 19, the trading volume of contracts for differences has accounted for 25% of the total trading volume of the London Stock Exchange.
What kind of wealth opportunities can contracts for differences bring?
First of all, domestic investors can easily enter the international market and have trading positions in different markets.
Second, overseas markets will provide better liquidity. Third, if funds are scattered in different markets in different countries, they will not be excessively affected by adverse fluctuations from a single market.
The difference contract is actually a contract about the difference between the buyer and the seller. According to the contract, the seller pays the difference between the contract price and the settlement price of a commodity in cash (if the difference is negative, the buyer needs to pay the seller). The whole process does not involve the transaction of commodity entities, so we can also say that this is an investment behavior completed by calculating the difference between the opening price and closing price of a commodity. The delivery in this process does not need to touch the subject matter itself at all, only needs to deliver their contracts.
It's a bit like we send mooncake tickets to a mooncake brand around the Mid-Autumn Festival.
For example, it is the 10 day of the eighth month of the lunar calendar, and X Xiangcun produces boxed Cantonese moon cakes. At this time, the market price of moon cakes is 100 yuan per box. If I think that the demand for this kind of mooncake is in short supply in the future, the price of mooncake will go up, then I will buy this kind of mooncake and sell it after the price goes up. But this delivery method is too troublesome, so I set up a bullish CFD contract, that is, a "bullish (bullish)" moon cake ticket. Opening price 100 yuan, quantity 1 box. At this time, I bought a bullish moon cake ticket contract and paid the seller 100 yuan. And this seller is a person who is "bearish" on the price of moon cakes. Don't ask why people are bearish, people are naturally bearish.
In the eighth month of the lunar calendar 13, the price of moon cakes rose to 1 10 yuan. I sold the contract. At this time, the buyer gave me 1 10 yuan, and I handed in the contract (mooncake ticket). At this time, my income was 1 10 yuan and my profit was 10 yuan.
What should I do if I am bearish? To put it short, it is to borrow a mooncake ticket and sell it, and then buy it back and return it to others. Note that in this process, we only expect a future price, and the contract is only about the price. No one has ever met the moon cake god. Moreover, in order to simplify the transaction process, contract transactions often do not require you to pay the full amount, only need to pay a deposit. For example, this mooncake coupon of 100 yuan can be traded only by paying the deposit from 5 yuan, and the deposit will be returned to you after delivery.
However, in this process, the bid in CFD contract transactions is not moon cakes, but foreign exchange comparison, gold, silver, crude oil, or other commodities such as soybeans, orange juice, pigs, cocoa and cotton. Moreover, due to many rules of providing a platform, this kind of contract is also different from other contracts, which will be mentioned later.