EE CHO LIAN A Contract for Difference (CFD) is a derivative that allows investors to speculate on the future price movements of the underlying asset, without having to own them. CFDs are available for a wide range of assets ranging from shares to commodities, and they are traded on margin i.e. investors only pay a small percentage of the value of the underlying shares. While the risks are higher if the underlying counter were to move against the investor’s position, the rewards are also higher if the counter were to move in favour of the investor. CFDs are generally traded over-the-counter with a CFD provider, as the counterparty to the trades. When trading in CFDs, the investor first enters into an opening trade with a CFD provider. The investor subsequently enters into a trade to close his CFD position and the profits or losses are determined based on the price difference. Ee Cho Lian (Ee) traded in CFDs offered by City Index Pte Ltd (City Index), which priced these contracts by referencing (more...)