At Bernstein Bank, clients are able to profit from rising as well as falling exchange rates with contract for difference (CFD) online trading. A CFD is a contract between a CFD broker and the client that stipulates that the seller will pay the buyer the difference between an asset’s current and original value at contract time. For negative values, the buyer pays the seller. CFDs are synthetic investment vehicles. The underlying baseline values like stocks, indices, and commodities are not delivered physically.
Compared to options or certificates, the major advantage of CFD online trading is its price transparency. A CFD is always quoted at almost the same level as the underlying assets and adjusts its price accordingly. CFDs can also be traded on margin. This means that investors and traders can move a multiple of the traded position value on the market with a percentage margin of that value.