CFDs are tradable instruments that mirror price movements of an underlying asset. The profit or loss you make is the difference between the price at which to open a position and the price at which you close it. In case of treasury CFDs, the underlying reference asset is fixed income securities issued by the government and/or other bonds. A major advantage of trading treasury CFDs is that you can benefit from even extremely small price movements.
The price of most CFDs is influenced by multiple factors. These include the regular demand and supply factors and performances, corporate actions (for example in share and index CFDs) and other finer points that make markets move in the way they move. However, when you trade in treasury CFDs the major and some sometimes the only factor that you need to be aware of is the underlying profit (interest) associated with the treasury instrument related to the CFD. That means that your view of the market depends upon the direction in which you expect interest rates to move in future.
Normally, treasury instruments and related CFDs trade at a premium if the prevailing interest rate in the country is less than the rate at which the bonds were issued at. That means that you would go long on treasury CFDs if in your view interest rates are likely to fall.
The other factor that influences treasury CFDs is the interest amount paid or payable on the bond. As time passes the face value of a bond increases in line with the interest accrued on it unless it is a bond that actually pays out monthly/quarterly/annual interest. In that case, the price of related CFDs will increase gradually in the run up to the record date for interest payment and revert back after the record date.
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