You've heard how Catherine Davey turned $13,000 into $30,000 in 3 months and how a former school teacher, Will Kraa pulled in $65,000 in one week, both by trading CFDs. So what are CFDs and is it really possible to achieve these superior returns?
CFD’s, or Contracts For Difference, is one of the fastest growing investment products in Australia. Large investment firms and individual traders alike are flocking to this highly leveraged means of trading assets. CFD’s have been in existence since the 1990’s, and as ‘over-the-counter’ investments in Australia since 2002. In late 2007, the Australian Stock Exchange (ASX) gave increased legitimacy and availability by creating exchange traded CFD’s.
But what exactly are CFD’s? What cautions should be heeded with this relatively new trading vehicle? What should an investor know before trading with CFD’s? This article series will consider the following aspects to CFD’s:
CFDs Articles
What are CFD's? Why Trade them? the leverage can be 20 times or greater that of the asset holder. With so many advantages attached with a Contract For Difference, they are definitely worth further investigation.
Two major types of CFD models exist. One is called Direct Market Access (DMA), and the other is termed Market Maker (MM). They each have their own advantageous and disadvantageous. Here are the pros and cons of each
Buying a Contract For Difference uses margin to create massive leverage. The two types of margin that exist are initial margin and variation margin.
Learn how to calculate overnight CFD interest (financing fees) for a long position. If we trade our CFD intra-day, we do not pay financing fees.
Here are some real life CFD trading examples. First we will examine a long CFD and the finish with a short example where we anticipate a drop in the market.
There are many reasons for an investor to trade CFD’s, and a couple of reason why they may choose not to use them. Here are a list of examples. A prudent investor will weigh out the pros and cons of this investment vehicle.
Contracts For Difference have some unique risks associated with them, as well as some general dangers common to many investment types. Here are the top 7 risks associated with trading CFDs.
No doubt you want the best rates, the most reliable providers, trustworthiness, and a wide range of options on CFD’s. Learn how to choose the best CFD provider for you
Just because many investors are profiting and trading this type of investment does not mean that you should jump in head first. You will need to exercise due diligence and carefully read the following articles to determine if this highly leveraged speculation is something you should include in your trading portfolio.
Without further ado, let us find out what sort of engine is under the CFD hood.