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What are the differences between trading in CFD and Futures?


Myles

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Hello Myles,

Both CFD and Futures have become widely used in investment tools. They allow investors to deal with assets much easier and are able to control their risks. Although CFD and futures are homogeneous, they offer a different range of products. Their investing options are also dissimilar.
At times you may find it better to invest in futures while other times you prefer CFD.
In a contract for differences, you speculate whether the price of an underlying asset will rise or fall without necessarily owning the asset. In futures, the client will agree to purchase the fundamental asset at a given price and at a future date.
A contract for differences does not have a future price or date.
CFD trading does not have an expiry date, unlike the future whose trade ends at a particular time.
In futures, the trading takes place in a central and open market where the buyers and sellers can recognize the exchanges that are taking place. In CFD trading, there is a broker who runs the transactions between the participants.
 In CFD trading, the spreads are usually high in contract to those in future trading. Fees charged in the future are, however, much more than the ones you will pay in CFD trading.
Though both Futures and CFDs are usually leveraged, futures margins are usually high since its transactions will take place, incurring more capital. 

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