Contract for difference(CFDs) Essay Example | Topics and Well Written Essays - 12500 words

Contract for difference(CFDs) - Essay Example Following this the next chapter will deal with the pricing of the CFDs. Also the trading of the CFDs will be discussed in detail within this chapter. This will provide for a better understanding of the working of the CFDs and will also detail the risks that face the investors who invest in the CFDs. The chapter will also provide for details of how the CFDs can be hedged. This chapter will form the body of the research and will discuss the details like the trading methods that can be used for these financial instruments. Also the pros and contras, and sample computation of CFD will be discussed in detail within this research. Also sample pricing will be discussed within the research, which will help provide a better understanding of how the pricing is done in the real time. The last chapter of the literature review will involve a comparison of the contract of differences with futures, options and spread betting. This will help gain an insight of how the contracts for difference are different from the more commonly used derivatives. This will also help understand in brief the futures, options, spread betting and will provide for an understanding of how they work. Since the objectives of this research are very basic and are mainly to understand the global financial instrument – CFD better, hence secondary research will be used in this research. This will involve a through research of the contract for differences. The research will mainly be carried out mainly using books, research papers, etc. This research is very different from the primary method. This is also referred to as the Tertiary research. The research involves using information that has already been presented by other authors, in previous researches. The main sources of the data are from books, journals, newspapers, online sources, etc. In short the secondary research refers to information published by others and which is already available1. It is also data collected by other people