What are CFDs (Contract for Difference)?

A Contract for Difference (CFD) is a financial instrument that allows traders to speculate on the price movement of an asset without owning the asset itself. CFDs can be based on a variety of assets such as:

• Stocks
• Commodities
• Indices

Instead of buying or selling the actual asset, a CFD lets traders enter into a contract with a broker. The profit or loss is calculated based on the difference between the asset’s price when the contract is opened and when it is closed.

Features of CFDs:

1. No ownership of the asset:
   CFDs allow investors to track or speculate on the performance of assets without requiring physical ownership. For example, tracking the NASDAQ or S&P 500 through a CFD doesn’t involve owning any shares in the companies listed on those indices.
2. Global market access:
   CFDs provide exposure to global markets and indices from different countries, like the U.S., Germany, Japan, and more, all in one platform.
3. Leverage:
   In traditional CFD trading, leverage allows traders to control larger positions with a smaller amount of money, increasing both potential gains and risks. However, since CFDs on Kite are not available for trading, leverage does not apply.
4. Different trading hours:
   The trading hours for CFDs are based on the markets they track, and these hours may differ depending on time zones and daylight saving adjustments.