CFD or Contracts for Difference has different types available but in general has been categorized in three types: Unlisted, Listed and Exchanged. Each of these types have properties that are distinct and depend on your CFD trading plan and preferences. These when considered, shall be a list of options you can look into to determine that which is more suitable for you. Below is the breakdown of these three classifications to give you an overview of what is the advantage and characteristic of each.
Unlisted CFD
This is one of the most common types of CFD, unlisted CFDs is what is known to most, the traditional description of CFD Trading. The trader exchanges instruments or underlying assets that are exchangeable for differences in prices between the opening and closing of the contract. These types of CFDs are mostly overseen by the broker and are an agreement between them and the trader, also providing unlimited losses and unlimited upside gains. As it sounds, unlisted CFDs are not listened to in an openly traded market and any stock exchanges and offer different products all throughout.
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Listed CFD
In contrast with Unlisted CFDs, you as a trader are able to have transactions based on listed CFDs and have different numbers of keypoints in doing so. One thing you need to look into is that listed CFDs are present/listed in the public market and are overseen by the specific stock exchange it falls into. Listed CFDs are exchanged by the public for primary and secondary reasons and quite different from unlisted ones. This means that as you transact through a broker, there is only a small difference from trade to trade as these transactions are being facilitated by the broker rather than with him or her.
This enables the trader to benefit as you are only given a very limited form of downside exposure as compared to unlisted ones and unlike there where as traders are required by brokers to fund up until the extent of which the positions may hit negative, listed CFDs are bought just like shares through a free guaranteed stop and automatically puts a capacity on the liability of the position you have projected in your investment. As you trade Listed CFDs. you are eliminating the big disadvantage of unlisted CFDs traded but do not change your style in that of which you use your trading instrument.
Exchange Traded CFDs
This is somewhat a less available widely type of CFD compared to the first two mentioned in this article. Just like listed CFDs, these are traded publicly but the trader benefits from a bigger amount of transparency and has better accountability compared to that of a regulated stock exchange. The chances for you to come across faux traders with bad business terms are small as the scrutiny and security that are present in this due to the trades in this type of CFD is far better and bigger compared to others. There is far better advantages with Exchange traded CFD permitting that you are able to handle the sizable amount of exchanges being made in the transactions.