Clients can apply Contract for Difference (CFD) to trade stock index, crude oil and precious metal through Pacific Trading Platform. CFD, known as Contract for Difference, is a special and popular over-the-counter financial product and enables the traders to easily hold the positions of various financial markets.
The APX mainly obtain its remuneration from bid-ask spreads, which is the main trading cost of the majority of traders. The bid-ask spread refers to the difference between the bid and asking price of any financial instrument and is expressed in form of percent point. The bid-ask spread offered by the APX is low and you can freely view it from the board of the trading platform at any time.
Overnight positions are involved in pay and receive interests for overnight financing. Both the negative and positive overnight interests are applicable to all positions held at EST 17:00 (generally, that is 22:00 in UK), same as foreign exchange positions. You may view the interests to be paid or earned by each contract at 5:00 p.m. from Board RollS (sell overnight interests) and RollB (buy overnight interests) of the trading platform. You also can read the CFD Product Guide to understand the method used to calculating financing charges.
CFD provides linear return: if relevant asset rises or falls, the same thing will happen to the account balance of the trader. In addition, different from options, traders don’t need to pay the initial option premium. Another advantage of hedging by CFD is that there is less restriction on transactions and that the rights from several exchanges do not need to be obtained.
Yes, it does. CFD may bring multiple choices to the traders, so that the flexibility will be improved.
CFD, traded by leverage, enables the traders to use the assets that are less than those required by controlling the equivalent position of relevant asset, so as to control a greater market position. The leverage may increase your profit and loss dramatically.
By means of CFD account, traders can trade foreign exchange, stock index, crude oil, gold and silver by one account. Trading in relevant market, traders always need to own more than one account, settle the account by several currencies, and open accounts with different brokers.
The Energy CFD (including UK Oil, US Oil and NGAS) has monthly due date. The Treasury Bond CFD (such as Bund) has quarterly due date. Copper is the only metal that has due date which is set every two months. With regard to other CFDs, the cash product without due date is similar to the foreign exchange traded in Pacific Exchange. Like foreign exchange, traders don’t need to transfer the position on their own. For the convenience of the traders, Pacific Exchange will do that for the traders. It's worth noting that the price of CFD may be affected by the contract transfer in futures market, because the time for transfer is relatively fluctuant in the market of relevant assets.
The only exception is that the rule doesn’t apply to Energy, Copper and Treasury Bond CFD, because they are due every month, every two months, or every quarter. On the due date, any trader holding Energy, Copper and Treasury Bond CFD will find that the position is closed automatically and that the profit or loss of their account is realized. When the transaction is recovered, the trader may establish the Energy, Copper and Treasury Bond CFD for the next month. More details about the expiration procedure and the due date of Energy, Copper and Treasury Bond CFD can be seen in the guide of CFD product. More details about the expiration procedure and the due date of Energy, Copper and Treasury Bond CFD can be seen in the guide of CFD product.
CFD can only be traded within specific time (see more details about all the assets in the guide of CFD product), but the limit-price and stop-loss can still be adjusted even though the trading is suspended, except weekends and bank holidays during which transactions cannot be established and limit-price or stop-loss cannot be modified.
As the price of CFD is based on that of relevant assets, the peak hours of it are usually the opening time of the exchange that trades relevant assets. Some CFD products also have non-peak hours which indicate the time when the assets are traded in the electronic market.
The fair value is a value that fully considers all the factors that affect the price of stock index futures contract, such as the calculation method of interests and stock dividends. Many media often use the price adjustment of fair value to provide the market index quotation according to the futures contract.
The price of CFD originates from relevant index or spot products. For the CFD product of Pacific International Stock Exchange, the quoted price is based on the price of relevant futures minus the common fair value. For the CFD product of commodity, the price is based the price of relevant futures. Like the foreign exchange products of Pacific Exchange, the CFD price includes the additional differences to bid-offer spread.
The clients of Pacific Exchange don’t such risks, and we promise that you don’t need to pay for the negative balance incurred by transaction. One of the greatest concerns about the leverage from traders is that the huge loss may result in debt to the broker. But for clients of Pacific Exchange, the highest loss risk equals to the deposit in the account. All the accounts are monitored by the functional system of "margin monitoring”. With the function of "margin monitoring”, the Pacific Trading Platform will trigger the notice of margin collection to close all positions if the net value of the account falls below the margin requirement. The leverage effect is both advantageous and disadvantageous, which can enlarge both your profit and loss significantly. Applying high or even medium leverage to foreign exchange transactions may not suit all investors.
Yes, it will. The margin requirements of account vary with the market volatility and the change in monetary exchange rate. Any change in margin will be displayed in the MMR (minimum margin requirement) column in the simple quotation window of the trading platform. The change in margin requirement will also be reflected in the guide of CFD product.
In most cases, the initial margin equals to about 1% of the total contract amount (assuming that the leverage is 100:1). The margin requirements of all CFSs can be checked in the guide of CFD product.
The margin can be regarded as the actual deposit in security demanded for maintaining the position. This is not a charge item or transaction cost, but a part of net value of the account is allocated to be the margin deposit. The margin shall be measured and determined by certain percentage of trading volume plus some cushion amount. Adding cushion amount aims to assist in relieving the daily or weekly fluctuation. You can know more details about the margin as well as how it’s operated in the following websites. You can know more details about the margin as well as how it’s operated in the following websites.
Please note that the margin trade may not suit all investors as it involves great risk in loss.Please note that the margin trade may not suit all investors as it involves great risk in loss.
The basis point is a unit that the Pacific Exchange uses for calculating the increase range of profit and loss. This is the standard applied by the foreign exchange market, so as to replace "point” or "price”. For foreign exchange tools, "basis point” is a place in the mantissa of the quoted price. For CFD, "basis point” is the last place of the quoted price.
The value of basis point depends on the settlement currency and trading volume of the CFD product and account that you are trading. You can check the current point value of any financial instrument within the account through the quotation window.
The point value shows the value of 1 point of profit or loss created by 1 CFD held by relevant financial instrument, and the currency that is shown indicates the settlement currency. As the Pacific Exchange calculates the profit and loss by basis point and adjusts the profit and loss to the settlement currency of your account automatically, you don’t need to establish an account which is settled by the currency of different countries, and you can still trade the stock indexes of different countries. The trading platform will complete all the conversion jobs for you automatically.
The Pacific Exchange applies the trading system "based on board lot” to enable the platform to include the positions held by all clients in the standard trading unit, which simplifies the procedure to complete transactions in various markets through an account and traces the profit and loss of the platform. The margin, net value and other account balances are expressed in a currency. This greatly simplifies the calculation of profit, loss and risk of traders.
For all stock indexes (except SPX500), during the transaction of 1 contract, every time when the price of CFD moves 1 point, you’ll obtain 1 basis point of profit or loss. For SPX500, every time when the price of CFD moves 0.1 point, you’ll obtain 1 basis point of profit or loss.
For crude oil, gold and silver, every time when the price of CFD moves 1 cent, you’ll obtain 1 basis point of profit or loss.
Please note that, for all CFD products, the last place of price is "basis point”.