subject: CFD Trading Markets: Equities [print this page] The term equity refers to anything of value in its ordinary meaning. The term is much more limited in its intension in the world of trading. It denotes ordinary stocks and shares. Equity helps in trading the underlying stocks and shares without needing to take ownership of them. There are several advantages to profiting from share price movements using CFDs rather than buying the actual shares.
All major shares, Indices and Sector CFDs are available for UK, European, US and Pacific Rim markets. These exchanges serve as managed auctions for stock trades. But, stock indices in small companies are bought and sold in OTC (over-the-counter) markets.
Deals can be performed by the owner of the stocks, or by an agent. There are two types of trading - Proprietary trading (also called principal trading) and Agency trading. First one is buying and selling for the trader's own profit or loss. Here, the principal is the owner of the shares. In the case of agency trading, an agent (usually a stock broker) buys and sells stocks, on behalf of a client. Stock brokers are paid a commission for performing the trade.
Stock Indices: One full point movement in a Stock Index is equal to one currency unit of the country the index belongs to. For example, one point movement in DJIA30, S&P500 or NASDAQ100 would be equal to US$1. Number of points movement in a Stock Index multiplied by the number of CFD contracts you trade (minimum is 1 CFD contract), determines your profit or loss.
Sector CFDs: Here, the traders have the flexibility of contracts for difference. They can choose for several sectors from financial sector, health, energy, technology, retail, etc. Using sector CFDs you can trade in a way which would be difficult if you only traded stocks.
