What is CFD trading?
A contract for difference (CFD) is a type of trade that allows traders in SA to speculate on asset price movements. South Africans involved can take either a long position (the asset price will go up) or a short position (the asset price will go down) when purchasing CFDs. At the time when the contract expires, the trader is paid the difference in the case of a correct speculation, or must pay the difference in the case of an incorrect speculation.
CFDs are a popular method of trading Forex, commodities, and stocks in South Africa. Most platforms that offer CFDs will allow the trader to use leverage; with some as high as 1:1000. This means that traders could make significant gains or losses with a relatively low investment.