{"id":277,"date":"2021-08-08T18:05:56","date_gmt":"2021-08-08T16:05:56","guid":{"rendered":"https:\/\/cfd-trading-blog.com\/?p=277"},"modified":"2021-10-23T14:12:51","modified_gmt":"2021-10-23T12:12:51","slug":"wie-funktioniert-der-cfd-handel","status":"publish","type":"post","link":"https:\/\/cfd-trading-blog.com\/en\/cfd-education\/how-does-cfd-trading-work\/","title":{"rendered":"How does CFD trading work?"},"content":{"rendered":"
CFDs (contracts for difference) are particularly speculative derivatives. They are generally used for pure speculation on the price trend of an underlying asset assigned to them. CFDs belong to the group of derivatives. Generally, the price of a CFD is derived directly from the individual underlying, for example, from an index or a share.<\/p>
Even for an experienced investor, an investment in CFD products is always a speculative investment because investors can open high trading positions with little capital investment. Therefore, the considerable risks of this CFD speculation cannot be completely avoided.<\/p>
Therefore, it is advisable for investors to study in detail the general functioning, products, markets and mechanisms of CFDs.<\/p>
The CFDs generally do not expire. Compared to options or futures, for example, they do not have an end of term. For example, if you hold a commodity CFD that relates to a copper future, for example, the CFD will also not be closed when the future expires at some point. Instead, the CFD is rolled into the next future contract.<\/p>
Another risk is an automatic closing of the CFD. This action happens when the loss of a CFD position has reached the amount of the paid margin. In this case, the CFD broker would close the position, as losses exceeding the performance would not be covered. Thus, the position expires. A total loss has then occurred, the risk of which increases with a higher leverage.<\/p>
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CFDs are treated as forward transactions for tax purposes. Thus, the profits from CFD transactions are subject to the final withholding tax that has been in force since 2009. Such a tax amounts to 25 percent plus solidarity surcharge and possibly the church tax. Since CFD brokers are usually not directly regulated by BaFin, they do not pay the tax directly. Therefore, you have to enter the profits or losses in the tax return yourself.<\/p>
CFDs are derivative products that allow investors to trade on a specific margin. This helps to get an optimal access to the financial markets. Thus, the investor can trade the CFDs on different asset classes, such as indices, stocks, commodities, cryptocurrencies or currencies.<\/p>
The selection of tradable markets is an important decision criterion for a good CFD broker. This is one of the biggest differences between CFD brokers. Especially those who want to trade special values and smaller stock companies must look closely here.<\/p>