Differences between CFDS and FUTUROS | What to trade and why? | TRADING TIPS
CFDS and FUTURES seem to be the same in trading but they are not quite. Discover the differences between them from the hand of Jordi Marti, Head of Studies at La Factoría and professional trader.
Hello, today I will talk to you about something that confuses many people. The difference between what is a future and what is a CFDS. What is a future? A future is a contract for the exchange of goods for money with a future delivery time and a fixed price. A CFDS is a financial instrument through ...Read more
Hello, today I will talk to you about something that confuses many people. The difference between what is a future and what is a CFDS. What is a future? A future is a contract for the exchange of goods for money with a future delivery time and a fixed price. A CFDS is a financial instrument through which you speculate on the price difference between the contract opening and closing.
The future can be hedging or it can be speculative. If it is hedging it will mean that in the end I want the good, and if it is speculative it is that I do not want the good, I simply want to operate it financially. The future allows leverage, it is carried out in an organized market at the signing of the contract; In other words, when we carry out the operation, it is not necessary to have the money or the good, but on the exchange date, it is necessary to have the money and the good.
The futures that we can trade or operate are: raw materials, agricultural products, financial products, currencies, indices, stocks ... there are endless products that have a future.
Schematically: today I agree on the money and the good that I am going to exchange, but I do the exchange when at a future date. Let's imagine that we are a transport company, an airline or a shipping company. Perhaps I am interested in securing the price of oil in six months and, therefore, what I will do is a futures contract in which I agree that in six months I will buy that oil from you but I define the price today. They care relatively little whether the price goes up or down, what they want is that good at a specific price and to know it in advance.
The CFDS, just like the future, allows leverage, but be careful, a CFDS has no expiration dates, I can extend it indefinitely. This exchange takes place in an unorganized market, which means that if I have problems with my broker: be careful. The future market is regulated by CFDS no. It is never necessary to dispose of the good because it is a pure and solely financial product. I will not exchange goods. Just as in futures, I can do it with many financial assets: raw materials, agricultural products, currencies, indices, stocks ... etc.
If we look at a CFDS schematically we will see that it is the same as in the future. Today we agree on a good to be exchanged, but the future date there is no exchange of good or money. In short, futures and CFDs look the same, but they are not the same because they are both leveraged; They seem the same because with both he could go long and short; But they are not the same. The difference. Futures vs CFDS is that the futures market is regulated and the CFDS market is not, therefore, if I have a problem with the broker, I have a problem. Finally, the future market can be used as a hedge to obtain the good, while the CFDS market cannot. So far the main differences between CFDS and futures
Remember I prefer to lose money in a trade than to lose more so do not move your stomach.Less