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A CFD is simply an agreement to exchange the difference in value of a particular share between the time at which a contract is opened and the time at which it is closed. CFD trading is very similar to normal share dealing. You deal at the bid/offer price of the share, and pay a commission which is calculated as a percentage of the value of the transaction. Our standard commission rate for UK shares is just 0.25% (see contract details).
When you open a position, however, you do not have to pay for the full value of the shares. Instead you put up a deposit, from just 5% of the contract value. |
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Interest and dividend adjustments
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CFDs have no fixed expiry date, giving you the freedom to close your position when you choose. While your position remains open, your account is debited or credited to reflect interest and dividend adjustments. |
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Your account is debited to reflect interest adjustments and credited to reflect any dividends. This mirrors the effect of buying shares in the normal way, where you no longer earn interest on the cost of the shares, but do receive dividends.
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Your account is credited with interest adjustments and debited to reflect any dividends. This mirrors the effect of selling shares, where you earn interest on the proceeds of the sale, but cease to receive dividends.
Our interest rates are highly competitive and are generally much lower than, say, margin lending. Dividend adjustments are applied at the amount of the net dividend, if you have an open position in a share on the ex-dividend date.
The best way to see how a CFD works is through an example.
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