Hi all.
I hope someone can help understand what does quantity mean when buying or selling CFD. In one of the videos it mentioned that when you buy any commodities that we are not buying anything (dont own anything). If thats the case how do you quantify quantity?
For instance if I buy 10 bitcoin cash it seems that I dont actually own those 10 coins I’ve just bought. Is that true. And also sometimes the quantities are way too high in their 100’s and 1000’s. Surely im not able to understand the measure of units.
Could somebody shed some light please? And excuse my novice pretty new to trading etc and this platform…
CFDs are Contracts For Difference, meaning you enter a contract where you pay a set amount tied to the value of the underlying commodity, stock or currency now, and agree to settle the difference at a later point in time when the value of the underlying product has changed.
Essentially, you are just saying “I am agreeing to pay or be paid whatever difference there is between the value of 10 BTC now and 10 BTC when I close the position”.
That is why you can “buy” more Bitcoins than your account balance would allow, because you are not actually buying anything, you are just entering a contract where the amount paid at the end is dependent on the value change of 10 BTC.