What is CFD?

Contract for Difference or CFD, as it is commonly known in the business world, is one of the most promising stock trading programs. Contract for Difference is a form of trading with a difference. You make money without actually owning a share. In this type of trading, you don't have to pay the full value of the shares as is done in traditional trading.
CFDs work on the margins.Here a fraction of overall value of the trade is invested by you. The benefits of CFD are: make money even from falling market. In addition to that, profits are ensured in the rising markets. There is no stamp duty involved in CFD trading. You don’t have to put all the money in the market at once as you do when you buy shares. You can trade in different segments through CFDs, such as equity, commodities like gold and gas, forex etc. They are good for short term trading as against to long term investments.
Now the cons of Contract for Difference trading: CFD is not for the faint hearted. It reaps you high profits, but involves high risks too. So if you have a solid financial back up to counter the losses, then only you must think of entering this field of investing.
If you are game for CFD, you can start your first online stock trading through various companies that offer you good advice on CFDs as well as help you to keep track of the performance of the CFDs. There are mainly two types of CFD providers. First is anonline stock market trading broker which acts as your agent and work on a commission and second one is a commission free provider, but they add an extra spread according to the rate of the underlying stock. You should go in for the one you feel confident and comfortable dealing with.