Contracts For Differences
So if you’re wondering about Contracts For Differences, and what they are, then see this description here of online CFD trading.
Trading CFDs online is a method of trading which has risen in popularity, as has forex trading in recent years.
Why has this been so?
The main reasons people get into CFD trading are:
1. The leverage.
By trading trad sizes larger than the initial capital, you are able to make larger profits from a profitable system. But remember that leverage magnifies your results. So if your trading system results in a loss, then this is magnified as well. With a profitable system, then your results are more profitable with leverage. For example with 10% margin, your results are magnified 10 fold. Or with a margin requirement of 5% it is magnified 20 fold. Compare this with traditional margin loans for share trading of 50-70% and you can see the difference.
Tags: Contracts For Differences
. 04 Feb 10 | CFD trading | Comments (0)