Contracts for differences are allowed in over a dozen countries in the world but come along with strict laws and limitations. In the United States for instance, the U.S Securities and Exchange Commission does not allow CFDs to be traded. However, for those who live in countries where trading CFDs is an option, opening a CFD account is much easier to understand and complete than the complex laws and regulations that often go into the the process itself.
Once you have researched and decided on which CFD broker you would like to work with, you will need to open a new CFD trading account. To open a CFD account one must first apply for it. The application process is rather simple, consisting of an online (or hard copy) application form, which will ask for basic information such as your name, address, contact information, etc. You may also be required to provide financial data such as income, employment information, investment experience, among other things. The completed application form must then be sent to the proper address or emailed, after which time, all one can do is wait.
During the application and approval process, the identification of the person applying for the CFD must be verified. This is done by providing various forms of identification, which may include a driver’s license or other government issued ID. Companies must be very careful and thorough in verifying one’s identity in order to comply with various financial services regulations. This is done primarily to help deter and prevent money laundering and to help fight the funding of terrorism.
The finished application will then be reviewed for approval before the process of actually opening the account starts. The opening of the account is not a difficult process, but can take some time to complete.
Once approved, the interested party will then be provided the proper information to access an online account including a password, rules and regulations and other necessary information, including an account number. This number (and the password) are used to long into the actual account which may be funded as soon as it is open. Once money is credited to the account, the trading can begin. Accounts can generally be funded via cheque or bank transfer. A transfer is often the easiest and fastest way to make a deposit and it is all done over a secure network.
In many cases, the entire process of completing the required application paperwork, sending it for approval and confirming one’s identity can be completed within a couple of days, generally with only an hour or two of time invested. It is only in extreme cases that it would take longer than that. Also keep in mind that although the application process is simple, and contracts for difference are not a complex financial instrument, trading CFDs successfully and profitably can only be done with a lot of research and practice. There is high risk to the capitol one has invested and therefore, only that which you can afford to lose should be traded and handled.
If properly researched, managed and executed, and by using proper CFD trading strategies, CFDs can be a profitable form of trading and can even turn into a very successful business. Currently thousands of people have CFD accounts all over the world and with experience and discernment they make money no matter what the current market conditions may be.
