What is a contract for difference?
A contract for difference (CFD) is a derivative that reflects the price change of the index and provides the profit or loss caused by the price change, characterized by high risks and profits and applicable leverages. The profit or loss depends on the buy price or the sell price. There are a wide variety of CFDs on TDEx, including cryptocurrencies, commodities, indices, foreign exchange, US stocks, etc. TDEx supports the use of mainstream cryptocurrencies as margin. Users can make a profit from the rising or falling prices of the chosen instruments by going long or selling short based on their own judgment. The profit or loss is brought by the change of the price index and calculated at the entry price and the delivery price.
The example of going long: Assume the average entry price of BTCUSD is 3962.5, the closing price is 3970, the quantity is 1000, and the contract multiplier is 1 US dollar, then the profit is: [(1/3962.5)-(1/3970)] * 1 * 1000 = 0.0005 BTC.
Assume the user is going long on Nasdaq with BTC as margin, the average entry price is 7480, the closing price is 7510, the quantity is 1000, the contract multiplier is 0.000001, so the profit is: (7510-7480) * 1000 * 0.000001 = 0.03 BTC.
Mechanics of Filling Orders
In a CFD, the trigger price for an entry, close, take profit, or stop loss of an order is the last price, and the actual closing price is the buy or sell price. For example, the last price of BTCUSD.09 contract is 9852.5, the sell price is 9850, and the buy price is 9855. When the user is selling short on BTCUSD.09, the entry price is 9850. When the user is going long, the entry price is 9855, closing the position, take-profit and stop-loss settings are subject to the last price.
- The user goes long or short according to the price trend, and pays the corresponding margin for entry.
- User will have to enter the quantity and price to place an order. An order can only be placed when the account available balance is larger than or equal to the margin.
- User may open more or close positions anytime to take profit or stop loss.
- For the instrument with a delivery day, on the delivery day, all open positions will be closed, and the profit or loss will be transferred to the futures account under "Balance".
- All realized profit and loss will be displayed on the account
- After the existing contract ends, TDEx will launch new contracts.
Closing of the Transactions
Stock index futures, foreign exchange, commodities have corresponding trading hours (equivalent to the stock opening times and closing times). During the closing hours of the market, when the user clicks on the instrument, it shows that the transaction is closed, and the buy and sell price are displayed in white, indicating that the user is not able to open or close positions, and the system will prompt the next trading time.
For non-cryptocurrencies contracts, users cannot open or close positions in one minute after the market opens and one minute before the market closes.