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CFDs Made Simple: A straightforward guide to contracts for difference by Peter Temple

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2: Basic Concepts

All derivatives, including CFDs, rest on some basic concepts that we need to understand thoroughly before getting involved in them. They are the building blocks we need to master. So let’s start right off by listing them. Derivatives like CFDs are a lot easier to understand if you look at their component parts first.

So let’s have a look at each of these ideas in turn.

[When you reach the end of the chapter it might be worth re-reading it to make sure you’ve got these ideas firmly planted in your mind.]

Table 2.1: Basic components of derivatives

Underlying

We will be using the term underlying as a noun rather ...

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