The balance of the equity markets is set to tip in favour of CFDs over cash trades in 2011 as the demand for CFDs as a tax-efficient, highly-leveraged alternative to cash trades continues to swell.
Contracts for difference, or CFDs, have become a popular instrument of choice for institutional traders and private individuals alike, providing both a tax advantage over cash trades and a heightened degree of leverage thanks to the margined nature of CFD trading.
After a roughly 50/50 split of total trade volumes between CFDs and cash trades in 2010, analysts have suggested that the evidence points towards continuing growth in CFDs over the coming twelve months, which will catapult CFDs ahead of cash transactions, and mark a significant change of direction for the financial markets as a whole.
The last twelve months have seen something of a ground-shift in the financial markets, with the explosion in growth of CFDs as one of the stories of the year. Trickling down from the most profitable institutional investment firms down through to private traders across the world, CFDs have grown to become a direct competitor for cash transacting, providing both a tax saving for traders and the advance to extensively leveraged transactions. With a near 50% share of total equity trading volumes in 2010, CFDs look poised to play an increasingly important role in the financial services sector over the coming twelve months and beyond.
At independentinvestor.com, we’re preparing for the continuing expansion of CFDs as an investment vehicle by providing the web’s most comprehensive selection of trading tips and how-to’s, to ensure that traders from all backgrounds have an equal chance at success from the CFD markets, in addition to our in-depth reviews of CFD brokers which aim to make choosing a broker and getting started more hassle-free.