Why trade CFDs?

• What are CFDs?
• Why trade CFDs?
• Our CFD account
• How CFDs work

CFDs offer a number of benefits to traders who can place a portion of their assets into leveraged investments in exchange for potentially high returns (or losses).

Flexibility

Contracts for Difference offer access to a wide range of financial instruments from a single account.
With TD Waterhouse CFDs you can trade on individual shares, indices, commodities and currencies on UK and International markets. They are quick and easy to trade online and by phone, and can be used to back an investment to increase or decrease in value.

With TD Waterhouse CFDs you can trade on currencies, indices, commodities and individual shares on UK and International markets.

Tax Advantage

As CFD trades do not confer ownership rights they are currently not subject to UK stamp duty*.

*Tax laws may change and depend on your individual circumstances.

Leverage

Contracts for Difference are a leveraged investment, which means that the initial deposit required to place a trade is only a fraction of the value of the total underlying position. The initial deposit is, in effect, a down payment on any loss that may be incurred. This leverage gives CFD investors the potential to make greater profits for the same initial investment. Conversely leverage also increases the size of losses. When you hold an open position with a CFD, the minimum deposit level must be maintained at all times otherwise an auto-close out function will come into force. However, you can still potentially lose more than your initial deposit.

Instant Execution

TD Waterhouse CFDs offers instant execution in standard size or below as we make firm prices. Larger orders may be delayed as TD Waterhouse CFDs may need to hedge the underlying instrument.

Closing Positions

You can close your position at any time during TD Waterhouse CFDs trading hours.

Stop losses to limit your risk

Where available you can use Stop Losses to automatically close out a position if it turns against you, and thus limit your exposure.

Hedge your portfolio

You can use CFDs to reduce the risk of unexpected market movements. For example, you may have a long term share portfolio that you know you want to keep hold of, but you are worried that it may lose value in the short term because you think markets are heading down. You can take out a CFD that will help mitigate any short term loss.

Pairs trading

If you think that one stock is undervalued compared to another, you can use CFDs to go long (buy) one company and go short (sell) the other. For example BP compared to Royal Dutch Shell: even though they run similar businesses, you can use CFDs to go long (buy) one and go short (sell) the other. This can be a useful trading strategy for the more sophisticated CFD investor.

Please be aware that CFDs carry a higher level of risk and there is the possibility that you may lose more than you initially invested.

A small price movement in your favour can result in a positive return on the money placed on deposit, however, a small price movement against you may result in substantial losses, possibly more than the money placed on deposit. Prices can move quickly.

TD Waterhouse CFDs is a trading name of City Index Limited (CI), who is a provider of contracts for difference (CFD) trading and whose head and registered office is City Index, Park House, 16 Finsbury Circus, London EC2M 7EB. For the purposes of CFD any contract is between you and CI and all dealing, administration and settlement is carried out by them and TD Waterhouse Investor Services (Europe) Limited are not responsible for any of the functions they perform. Your account is held with City Index Limited (CI), which is authorised and regulated by The Financial Services Authority (FSA Registered Number: 113942).