A Contract for Difference (CFD) is a financial instrument that allows you to speculate on the price movement of an asset without owning the asset itself. You can base CFDs on a variety of assets such as:
- Stocks
- Commodities
- Indices
Instead of buying or selling the actual asset, a CFD lets you enter into a contract with a broker. Your profit or loss is calculated based on the difference between the asset's price when you open the contract and when you close it.
On Kite, you can only use CFDs for tracking global indices, and they are non-tradable. This means you can monitor the price movements of major indices like the S&P 500 (US500), Dow Jones (US30), or Nikkei 225, but you cannot trade or speculate on these CFDs through Kite.
Features of CFDs
- No ownership of the asset: CFDs allow you 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.
- Global market access: CFDs provide you with exposure to global markets and indices from different countries, like the U.S., Germany, Japan, and more, all in one platform.
- Leverage: In traditional CFD trading, leverage allows you 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.
- 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.