ISSN: 2225-8329
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Contract for Difference (CFD) is a leverage product that offers exposure to the market by only placing a small margin (deposit) of the total value of the transaction. CFDs provide traders with an advantage when the price of an underlying asset goes up (by taking a long position) or when it goes down (by taking a short position). When a CFD contract is closed, traders will receive or pay a certain amount of value that arises due to the difference between the purchase price and the selling price of an underlying asset. This shows that CFDs are almost similar to a futures contract in terms of their value derived from various underlying assets and both provide an advantage by providing leverage benefits. Hence, this study aims to examine the concept and course of CFD transactions implemented in Malaysia. This qualitative study applied the content analysis method. Findings show that most traders use CFDs to achieve leverage positions offered by brokers as well as to make short sales and as a hedging tool (hedging mechanism).
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In-Text Citation: (Safuan et al., 2022)
To Cite this Article: Safuan, N. Q. D. M., Ahmad, A. A., & Zain, M. N. M. (2022). The Concept and Implementation of Contract for Difference in Derivatives Market. International Journal of Academic Research in Accounting Finance and Management Sciences, 12(2), 16–24.
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