What trading and CFDs are

Trading vs investing

An investor buys an asset for the long term — years — and counts on the growth of a business or the economy. A trader works with price moves over minutes to weeks and can profit from both rises and falls.

Both approaches are legitimate and useful to the market: investors supply capital to companies, traders supply liquidity — the ability to buy or sell quickly at a fair price.

What a CFD is

A CFD (contract for difference) is an agreement with a broker on the difference in an asset’s price between opening and closing a trade. You do not own the share or the gold bar, but your result exactly follows their price change.

• You can open a trade on a rise (Buy) or a fall (Sell).
• No need to store the asset, open an exchange account or pay for delivery.
• Trades are opened with your own funds — no loan from the broker.

Who else is in the market

Central and commercial banks, pension and hedge funds, companies hedging currency risk, and retail traders. The price is formed by all participants’ decisions, so no single retail trader can control it.