About CFDs

CFD's

Contracts for Difference offer all the benefits of trading shares without having to physically own them. Contracts for Difference ( or CFD's) mirror the performance of a share or an index. CFD's are traded on margin, and the profit/loss is determined by the difference between the buy and sell price.

As CFD's trade on margin they offer great leverage opportunities and investors only need a small proportion of the total value of a position to trade. However, CFD's can be high risk and less experienced investors should look to receive professional advice.

CFD's are not suitable for 'buy and forget' trading or long-term positions. For short-term trading they have advantages, provided you get the markets right. CFD's offer the opportunity to 'go long' and 'go short' in the market. This means the investor can make just as much money in a falling market as they can in an rising market.

Margin

'Margin is one of the most important aspects of a CFD'

Margin or leverage means you do not have to payout for the full value of the shares. Instead, you put up a deposit. For example, the 'initial margin' for a share would usually be 5% or below. When trading currencies and indices using CFD's, the margin rates are as low as 1%.

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This gives you the ability to magnify your exposure by using the same amount of money to create a bigger and instant position in the market. You may also use leverage to create the same size position but using less capital. Please remember leverage can magnify profits and losses.

Stop Losses

A stop loss is an automatic trigger point where a trade is exited. This is useful if you want to define the risk of a trade.

JN Financial provide either Non-Guaranteed or Guaranteed stop losses.

Long and Short Positions

'Take direction if the markets go up or down'

This gives you the opportunity to speculate on prices falling. For example, from 2000-2003, the FTSE 100 was in a bear market. Because of the ability to go short, many investors at this time switched from shares to CFD's.

Short positions can also be used as an effective method of hedging other investments. These include shares, foreign exchange and commodities.

Tax Efficient

CFD's are not liable to UK Stamp Duty under current tax legislation.

Immediate Execution at the Market Price

There is no extra spread between the bid and offer price when trading CFD's at JN Financial. You can also hold the position for as long as you want.

Dividends

Benefit from dividends as if you were holding the physical shares. However, if you are short of the stock, the reverse applies.

No Expiry Date

CFD's have no expiry date, therefore you can hold a CFD for any period.

Trade the Global Markets

JN Financial covers all the major global markets, including Equities (UK, US, Europe and Asia), Commodities (for example Oil and Gold), Indices (for example FTSE100, S & P 500 and Nikkei 225) and Foreign Exchange (for example Sterling/Dollar and Euro/Dollar).

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Risk Warning

Trading in Contracts for Difference may not be suitable for all investors due to the high risk nature of the product. You may lose all of your initial stake through the use of leverage and may be required to make additional payments by way of margin on a frequent and sometimes daily basis. Failure to do so can result in the closure of part or all of your position.

The value of an investment in a Contract for Difference may be affected by a variety of factors, including but not limited to, price volatility, market volume, foreign exchange rates and liquidity. CFD's are a short term trading tool and commission is charged on the leveraged amount (not the deposit) and therefore costs can build up when frequently traded. You should evaluate potential losses against affordability. JN Financial are authorised to give advice on investments including CFDs, however extended runs of losses as well as profits can occur. Past performance is not necessarily a guide to future performance.

If in any doubt, please seek further independent advice. Tax laws may be subject to change.

JN Financial Limited is authorised and regulated by the Financial Services Authority No. 442252