MOVING AVERAGES 20, 40, 60 AND 200 The shortest term average I use, SMA 20, which I like to colour red, is the signal to open a trade. The trade will be long or short, depending on the trend. For example, when the trend is up and the price is above the red line, I look at opening a long trade, buying the stock. The next average, SMA 40, the 40 day average, I usually

make green.

MIFID IMPLICATIONS

MiFID is a comprehensive regulatory regime covering investment services and financial markets in Europe and introduces common standards for investor protection throughout the European Union. Basically MiFID essentially relaxes the way shares can be sold, and one of the big impacts will be that companies based in the European

Union will be able

CONTRACTS FOR DIFFERENCE Buying or selling the performance of a share through a CFD is almost identical to a physical equity trade financed by a loan. A client could borrow $20,000 from a bank to buy shares CHANGING MARGIN REQUIREMENTS After the HBOS price initially dipped 20%, before recovering to -10%, the margin requirement was changed to 100%. Anyone who had any leverage at all, received a margin call or had their position closed out at a 10% loss). A: I like that you actually bother to read the

small print.

CFD TRADING WITH MOMENTUM INDICATORS One of the well known momentum indicators is the RSI, the Relative Strength Indicator or Index. This combines facts about the strength of the price movement of a security to produce a number that is typically represented on a scale of zero to 100%. It combines the average up move with the average down move over a settable period, by default PAIRS TRADING WITH CFDS Pairs trading (sometimes known as statistical arbitrage, or a market neutral strategy) is a trading strategy that has become popular since the advent of CFDs (about 20 years ago), prior to this it was hard for a trader to short sell. Pairs trading is the action of an investor buying into one instrument and simultaneously selling another – it COMPARING CFD PROVIDER SPREADS Comparing CFD Provider Spreads. The difference between the buying price and selling price is one of the key costs of trading. Unlike the direct commission costs, spreads are a hidden cost of trading CFDs. Some brokers offer fixed spreads, allowing you to easily assess their impact in advance, while others will insist on variable spreads, and MOVING AVERAGES 20, 40, 60 AND 200 The shortest term average I use, SMA 20, which I like to colour red, is the signal to open a trade. The trade will be long or short, depending on the trend. For example, when the trend is up and the price is above the red line, I look at opening a long trade, buying the stock. The next average, SMA 40, the 40 day average, I usually

make green.

MIFID IMPLICATIONS

MiFID is a comprehensive regulatory regime covering investment services and financial markets in Europe and introduces common standards for investor protection throughout the European Union. Basically MiFID essentially relaxes the way shares can be sold, and one of the big impacts will be that companies based in the European

Union will be able

CONTRACTS FOR DIFFERENCE Buying or selling the performance of a share through a CFD is almost identical to a physical equity trade financed by a loan. A client could borrow $20,000 from a bank to buy shares CHANGING MARGIN REQUIREMENTS After the HBOS price initially dipped 20%, before recovering to -10%, the margin requirement was changed to 100%. Anyone who had any leverage at all, received a margin call or had their position closed out at a 10% loss). A: I like that you actually bother to read the

small print.

CFD TRADING WITH MOMENTUM INDICATORS One of the well known momentum indicators is the RSI, the Relative Strength Indicator or Index. This combines facts about the strength of the price movement of a security to produce a number that is typically represented on a scale of zero to 100%. It combines the average up move with the average down move over a settable period, by default PAIRS TRADING WITH CFDS Pairs trading (sometimes known as statistical arbitrage, or a market neutral strategy) is a trading strategy that has become popular since the advent of CFDs (about 20 years ago), prior to this it was hard for a trader to short sell. Pairs trading is the action of an investor buying into one instrument and simultaneously selling another – it COMPARING CFD PROVIDER SPREADS Comparing CFD Provider Spreads. The difference between the buying price and selling price is one of the key costs of trading. Unlike the direct commission costs, spreads are a hidden cost of trading CFDs. Some brokers offer fixed spreads, allowing you to easily assess their impact in advance, while others will insist on variable spreads, and HOW CFD PRICING WORKS Some CFD providers charge a fixed fee or commissions on cfd trades. The other alternative for traders is a quote-driven service, where investors are simply presented with their providers bid and offer prices. Another option is Direct Market Access which comes ready with

Level 2

CONTRACTS FOR DIFFERENCE Buying or selling the performance of a share through a CFD is almost identical to a physical equity trade financed by a loan. A client could borrow $20,000 from a bank to buy shares TRADING THE S&P 500 WITH CFDS To get some exposure to the US markets, you might want to consider trading contracts for difference (CFDs) on the S&P 500. The Dow covers 30 of the major blue-chip US companies, but the S&P 500 is compiled from the share values of 500 largest companies, PAIRS TRADING WITH CFDS Pairs trading (sometimes known as statistical arbitrage, or a market neutral strategy) is a trading strategy that has become popular since the advent of CFDs (about 20 years ago), prior to this it was hard for a trader to short sell. Pairs trading is the action of an investor buying into one instrument and simultaneously selling another – it HEDGING CLIENT POSITIONS The point being that if you enter into a CFD, the broker is obligated to hedge that bet in the market, but this obligation doesn’t exist in spread betting. A: First of all, you don’t have it all that far off from what is the case. Simplified, the key difference is that

spreads

CFD EXPIRY DATES

A: Unlike options and covered warrants cash-based CFDs don’t have an expiry date (futures-based CFD products do indeed have an expiry date that will be specified). As CFDs are traded on ‘margin’ you pay or receive an overnight financing rate linked to the London Inter Bank Offered Rate, (LIBOR). This means that you can keep them running COMPARING CFD PROVIDER SPREADS Comparing CFD Provider Spreads. The difference between the buying price and selling price is one of the key costs of trading. Unlike the direct commission costs, spreads are a hidden cost of trading CFDs. Some brokers offer fixed spreads, allowing you to easily assess their impact in advance, while others will insist on variable spreads, and WHY ARE CFDS NOT PERMITTED IN THE USA? The main reason why CFD trading is not available to US traders is because it is against US securities law. Over the counter financial instruments, such as CFDs, are heavily regulated through legislation like the Dodd Frank Act and enforced by the SEC (Securities and Exchange Commission). This power was granted under Title Vii of the

act when

CFDS COMPARED TO WARRANTS CFDs Compared to Warrants. Contracts for difference and warrants are both derivatives, meaning that they derive their value from some underlying financial security or stock but are not actually ownership of it. With CFDs, you will never own the underlying, but with warrants you may have the opportunity to buy it. THE FRENCH CONTRACT FOR DIFFERENCE / FOREIGN EXCHANGE Investment Trends is a leading specialist market research organisation in the global wealth management industry. We provide new insights and decision support information to over 200 leading financial services businesses across Europe, UK, US, Asia and Australia. WHY TRADE CFDS INSTEAD OF STOCKS? A: CFD trading is very similar to shares trading except that when you trade a contract for difference you don’t own the underlying share. Unlike investing in stocks, when you trade CFDs, you are not buying or trading the underlying asset. What you are buying is a contract between yourself and the CFD provider. The key difference between MOVING AVERAGES 20, 40, 60 AND 200 The shortest term average I use, SMA 20, which I like to colour red, is the signal to open a trade. The trade will be long or short, depending on the trend. For example, when the trend is up and the price is above the red line, I look at opening a long trade, buying the stock. The next average, SMA 40, the 40 day average, I usually

make green.

MIFID IMPLICATIONS

MiFID is a comprehensive regulatory regime covering investment services and financial markets in Europe and introduces common standards for investor protection throughout the European Union. Basically MiFID essentially relaxes the way shares can be sold, and one of the big impacts will be that companies based in the European

Union will be able

CHANGING MARGIN REQUIREMENTS After the HBOS price initially dipped 20%, before recovering to -10%, the margin requirement was changed to 100%. Anyone who had any leverage at all, received a margin call or had their position closed out at a 10% loss). A: I like that you actually bother to read the

small print.

WHAT DOES OVER-THE-COUNTER OTC MEAN? The general public know over-the-counter or OTC as a term used for pharmaceuticals, which denotes that a drug can be bought freely. The opposite to this is a drug that is only available on prescription. However, when you start trading you find that this description can also be applied to financial securities. LONG TERM TRADING STRATEGIES WITH CFDS Longer term trading with CFDs involves the classic buy and hold. If you have read about contracts for difference on other websites, you may be wondering about whether they are a wise choice for long term

trading positions.

HOW TO PREVENT YOUR SHARES HOLDINGS FROM BEING SHORTED Q: Why does short selling reduce share prices? A: To short-sell a share speculators have to borrow the shares in the first place. Once they have done this they need to sell them in the market, and if this is done en-masse it can push the share price of a company down in the short term as there are more sellers than buyers in the market. IS SHORTING BAD? IS SHORT SELLING EVIL? A: Generally, short selling is seen as a necessary, indeed desirable, feature of the market. If you want to argue that prices should reflect all information, both good and bad, then you have to have short-selling. Indeed, when the USA banned shorting in late 2008 the markets started a steep decline.

CFDS IN NEW ZEALAND

CMC Markets is claimed to be New Zealand’s leading CFD (Contract for Difference) provider having moved into the market in April 2006 and opened an office in Auckland. For instance in just one week in October 2008 CMC Markets reported a total trade count of 33,516 with turnover amounting to more than NZD$1.44bn across all instruments. SMALL CAP SHARES VS. BLUE CHIP STOCKS Small Cap Shares vs. Blue Chip Stocks. How do they compare? The larger shares are traded in bulk by investment houses, as well as being available for the private trader. As you are trading with CFDs, there is another factor, and that is the margin or deposit required. WHY TRADE CFDS INSTEAD OF STOCKS? A: CFD trading is very similar to shares trading except that when you trade a contract for difference you don’t own the underlying share. Unlike investing in stocks, when you trade CFDs, you are not buying or trading the underlying asset. What you are buying is a contract between yourself and the CFD provider. The key difference between MOVING AVERAGES 20, 40, 60 AND 200 The shortest term average I use, SMA 20, which I like to colour red, is the signal to open a trade. The trade will be long or short, depending on the trend. For example, when the trend is up and the price is above the red line, I look at opening a long trade, buying the stock. The next average, SMA 40, the 40 day average, I usually

make green.

MIFID IMPLICATIONS

MiFID is a comprehensive regulatory regime covering investment services and financial markets in Europe and introduces common standards for investor protection throughout the European Union. Basically MiFID essentially relaxes the way shares can be sold, and one of the big impacts will be that companies based in the European

Union will be able

CHANGING MARGIN REQUIREMENTS After the HBOS price initially dipped 20%, before recovering to -10%, the margin requirement was changed to 100%. Anyone who had any leverage at all, received a margin call or had their position closed out at a 10% loss). A: I like that you actually bother to read the

small print.

WHAT DOES OVER-THE-COUNTER OTC MEAN? The general public know over-the-counter or OTC as a term used for pharmaceuticals, which denotes that a drug can be bought freely. The opposite to this is a drug that is only available on prescription. However, when you start trading you find that this description can also be applied to financial securities. LONG TERM TRADING STRATEGIES WITH CFDS Longer term trading with CFDs involves the classic buy and hold. If you have read about contracts for difference on other websites, you may be wondering about whether they are a wise choice for long term

trading positions.

HOW TO PREVENT YOUR SHARES HOLDINGS FROM BEING SHORTED Q: Why does short selling reduce share prices? A: To short-sell a share speculators have to borrow the shares in the first place. Once they have done this they need to sell them in the market, and if this is done en-masse it can push the share price of a company down in the short term as there are more sellers than buyers in the market. IS SHORTING BAD? IS SHORT SELLING EVIL? A: Generally, short selling is seen as a necessary, indeed desirable, feature of the market. If you want to argue that prices should reflect all information, both good and bad, then you have to have short-selling. Indeed, when the USA banned shorting in late 2008 the markets started a steep decline.

CFDS IN NEW ZEALAND

CMC Markets is claimed to be New Zealand’s leading CFD (Contract for Difference) provider having moved into the market in April 2006 and opened an office in Auckland. For instance in just one week in October 2008 CMC Markets reported a total trade count of 33,516 with turnover amounting to more than NZD$1.44bn across all instruments. SMALL CAP SHARES VS. BLUE CHIP STOCKS Small Cap Shares vs. Blue Chip Stocks. How do they compare? The larger shares are traded in bulk by investment houses, as well as being available for the private trader. As you are trading with CFDs, there is another factor, and that is the margin or deposit required. CFDS TRADING AND CONTRACTS FOR DIFFERENCES This is because contracts for difference are traded on margin, and the profit/loss is determined by the difference between the buy and the sell price. Because contracts for difference trade on margin, investors only need a small proportion of the total value of a position to trade. CFDs also mirror any corporate actions that take

place.

WHY TRADE CFDS INSTEAD OF STOCKS? A: CFD trading is very similar to shares trading except that when you trade a contract for difference you don’t own the underlying share. Unlike investing in stocks, when you trade CFDs, you are not buying or trading the underlying asset. What you are buying is a contract between yourself and the CFD provider. The key difference between HOW CFD PRICING WORKS Some CFD providers charge a fixed fee or commissions on cfd trades. The other alternative for traders is a quote-driven service, where investors are simply presented with their providers bid and offer prices. Another option is Direct Market Access which comes ready with

Level 2

CONTRACTS FOR DIFFERENCE Buying or selling the performance of a share through a CFD is almost identical to a physical equity trade financed by a loan. A client could borrow $20,000 from a bank to buy shares RISK PER TRADE AND POSITION SIZING Let’s take another example this time only risking 1% of the pot. If you have an account valued at £10,000 and you want to buy a stock at �12 with a stop loss at £11.90, then the number of shares (position) to trade is: Position Size = Maximum Risk Amount / Risk Per CFD. Position Size = (1% x account value) / (entry price – stop loss

CFD EXPIRY DATES

A: Unlike options and covered warrants cash-based CFDs don’t have an expiry date (futures-based CFD products do indeed have an expiry date that will be specified). As CFDs are traded on ‘margin’ you pay or receive an overnight financing rate linked to the London Inter Bank Offered Rate, (LIBOR). This means that you can keep them running

CFDS AND DIVIDENDS

On the ex dividend date you can expect the value of the shares to drop by nearly as much as the amount of the dividend, which maintains a level equity for the conventional shareholder. What this means in practice is that your long CFD position can be expected to take a hit, even while you are receiving funds for the dividend amount. PAIRS TRADING WITH CFDS Pairs trading (sometimes known as statistical arbitrage, or a market neutral strategy) is a trading strategy that has become popular since the advent of CFDs (about 20 years ago), prior to this it was hard for a trader to short sell. Pairs trading is the action of an investor buying into one instrument and simultaneously selling another – it SMALL CAP SHARES VS. BLUE CHIP STOCKS Small Cap Shares vs. Blue Chip Stocks. How do they compare? The larger shares are traded in bulk by investment houses, as well as being available for the private trader. As you are trading with CFDs, there is another factor, and that is the margin or deposit required. TRADING CFDS ON MARGIN VERSUS BORROWING TO BUY SHARES Q: What is the difference between trading CFDs on margin and traditional margin trading? A:. Usually you need to have 100% of the cash available to buy a share. In some cases you can take out a margin loan and borrow to invest but you will still be required to have about 40% of the investment in cash. WHY TRADE CFDS INSTEAD OF STOCKS? A: CFD trading is very similar to shares trading except that when you trade a contract for difference you don’t own the underlying share. Unlike investing in stocks, when you trade CFDs, you are not buying or trading the underlying asset. What you are buying is a contract between yourself and the CFD provider. The key difference between MOVING AVERAGES 20, 40, 60 AND 200 The shortest term average I use, SMA 20, which I like to colour red, is the signal to open a trade. The trade will be long or short, depending on the trend. For example, when the trend is up and the price is above the red line, I look at opening a long trade, buying the stock. The next average, SMA 40, the 40 day average, I usually

make green.

MIFID IMPLICATIONS

MiFID is a comprehensive regulatory regime covering investment services and financial markets in Europe and introduces common standards for investor protection throughout the European Union. Basically MiFID essentially relaxes the way shares can be sold, and one of the big impacts will be that companies based in the European

Union will be able

CHANGING MARGIN REQUIREMENTS After the HBOS price initially dipped 20%, before recovering to -10%, the margin requirement was changed to 100%. Anyone who had any leverage at all, received a margin call or had their position closed out at a 10% loss). A: I like that you actually bother to read the

small print.

WHAT DOES OVER-THE-COUNTER OTC MEAN? The general public know over-the-counter or OTC as a term used for pharmaceuticals, which denotes that a drug can be bought freely. The opposite to this is a drug that is only available on prescription. However, when you start trading you find that this description can also be applied to financial securities. LONG TERM TRADING STRATEGIES WITH CFDS Longer term trading with CFDs involves the classic buy and hold. If you have read about contracts for difference on other websites, you may be wondering about whether they are a wise choice for long term

trading positions.

WHY TRADE CFDS INSTEAD OF STOCKS? A: CFD trading is very similar to shares trading except that when you trade a contract for difference you don’t own the underlying share. Unlike investing in stocks, when you trade CFDs, you are not buying or trading the underlying asset. What you are buying is a contract between yourself and the CFD provider. The key difference between MOVING AVERAGES 20, 40, 60 AND 200 The shortest term average I use, SMA 20, which I like to colour red, is the signal to open a trade. The trade will be long or short, depending on the trend. For example, when the trend is up and the price is above the red line, I look at opening a long trade, buying the stock. The next average, SMA 40, the 40 day average, I usually

make green.

MIFID IMPLICATIONS

MiFID is a comprehensive regulatory regime covering investment services and financial markets in Europe and introduces common standards for investor protection throughout the European Union. Basically MiFID essentially relaxes the way shares can be sold, and one of the big impacts will be that companies based in the European

Union will be able

CHANGING MARGIN REQUIREMENTS After the HBOS price initially dipped 20%, before recovering to -10%, the margin requirement was changed to 100%. Anyone who had any leverage at all, received a margin call or had their position closed out at a 10% loss). A: I like that you actually bother to read the

small print.

WHAT DOES OVER-THE-COUNTER OTC MEAN? The general public know over-the-counter or OTC as a term used for pharmaceuticals, which denotes that a drug can be bought freely. The opposite to this is a drug that is only available on prescription. However, when you start trading you find that this description can also be applied to financial securities. LONG TERM TRADING STRATEGIES WITH CFDS Longer term trading with CFDs involves the classic buy and hold. If you have read about contracts for difference on other websites, you may be wondering about whether they are a wise choice for long term

trading positions.

HOW TO PREVENT YOUR SHARES HOLDINGS FROM BEING SHORTED Q: Why does short selling reduce share prices? A: To short-sell a share speculators have to borrow the shares in the first place. Once they have done this they need to sell them in the market, and if this is done en-masse it can push the share price of a company down in the short term as there are more sellers than buyers in the market. IS SHORTING BAD? IS SHORT SELLING EVIL? A: Generally, short selling is seen as a necessary, indeed desirable, feature of the market. If you want to argue that prices should reflect all information, both good and bad, then you have to have short-selling. Indeed, when the USA banned shorting in late 2008 the markets started a steep decline.

CFDS IN NEW ZEALAND

CMC Markets is claimed to be New Zealand’s leading CFD (Contract for Difference) provider having moved into the market in April 2006 and opened an office in Auckland. For instance in just one week in October 2008 CMC Markets reported a total trade count of 33,516 with turnover amounting to more than NZD$1.44bn across all instruments. SMALL CAP SHARES VS. BLUE CHIP STOCKS Small Cap Shares vs. Blue Chip Stocks. How do they compare? The larger shares are traded in bulk by investment houses, as well as being available for the private trader. As you are trading with CFDs, there is another factor, and that is the margin or deposit required. CFDS TRADING AND CONTRACTS FOR DIFFERENCES This is because contracts for difference are traded on margin, and the profit/loss is determined by the difference between the buy and the sell price. Because contracts for difference trade on margin, investors only need a small proportion of the total value of a position to trade. CFDs also mirror any corporate actions that take

place.

WHY TRADE CFDS INSTEAD OF STOCKS? A: CFD trading is very similar to shares trading except that when you trade a contract for difference you don’t own the underlying share. Unlike investing in stocks, when you trade CFDs, you are not buying or trading the underlying asset. What you are buying is a contract between yourself and the CFD provider. The key difference between HOW CFD PRICING WORKS Some CFD providers charge a fixed fee or commissions on cfd trades. The other alternative for traders is a quote-driven service, where investors are simply presented with their providers bid and offer prices. Another option is Direct Market Access which comes ready with

Level 2

CONTRACTS FOR DIFFERENCE Buying or selling the performance of a share through a CFD is almost identical to a physical equity trade financed by a loan. A client could borrow $20,000 from a bank to buy shares RISK PER TRADE AND POSITION SIZING Let’s take another example this time only risking 1% of the pot. If you have an account valued at £10,000 and you want to buy a stock at �12 with a stop loss at £11.90, then the number of shares (position) to trade is: Position Size = Maximum Risk Amount / Risk Per CFD. Position Size = (1% x account value) / (entry price – stop loss

CFD EXPIRY DATES

A: Unlike options and covered warrants cash-based CFDs don’t have an expiry date (futures-based CFD products do indeed have an expiry date that will be specified). As CFDs are traded on ‘margin’ you pay or receive an overnight financing rate linked to the London Inter Bank Offered Rate, (LIBOR). This means that you can keep them running

CFDS AND DIVIDENDS

On the ex dividend date you can expect the value of the shares to drop by nearly as much as the amount of the dividend, which maintains a level equity for the conventional shareholder. What this means in practice is that your long CFD position can be expected to take a hit, even while you are receiving funds for the dividend amount. PAIRS TRADING WITH CFDS Pairs trading (sometimes known as statistical arbitrage, or a market neutral strategy) is a trading strategy that has become popular since the advent of CFDs (about 20 years ago), prior to this it was hard for a trader to short sell. Pairs trading is the action of an investor buying into one instrument and simultaneously selling another – it SMALL CAP SHARES VS. BLUE CHIP STOCKS Small Cap Shares vs. Blue Chip Stocks. How do they compare? The larger shares are traded in bulk by investment houses, as well as being available for the private trader. As you are trading with CFDs, there is another factor, and that is the margin or deposit required. TRADING CFDS ON MARGIN VERSUS BORROWING TO BUY SHARES Q: What is the difference between trading CFDs on margin and traditional margin trading? A:. Usually you need to have 100% of the cash available to buy a share. In some cases you can take out a margin loan and borrow to invest but you will still be required to have about 40% of the investment in cash. WHY TRADE CFDS INSTEAD OF STOCKS? A: CFD trading is very similar to shares trading except that when you trade a contract for difference you don’t own the underlying share. Unlike investing in stocks, when you trade CFDs, you are not buying or trading the underlying asset. What you are buying is a contract between yourself and the CFD provider. The key difference between MOVING AVERAGES 20, 40, 60 AND 200 The shortest term average I use, SMA 20, which I like to colour red, is the signal to open a trade. The trade will be long or short, depending on the trend. For example, when the trend is up and the price is above the red line, I look at opening a long trade, buying the stock. The next average, SMA 40, the 40 day average, I usually

make green.

MIFID IMPLICATIONS

MiFID is a comprehensive regulatory regime covering investment services and financial markets in Europe and introduces common standards for investor protection throughout the European Union. Basically MiFID essentially relaxes the way shares can be sold, and one of the big impacts will be that companies based in the European

Union will be able

CHANGING MARGIN REQUIREMENTS After the HBOS price initially dipped 20%, before recovering to -10%, the margin requirement was changed to 100%. Anyone who had any leverage at all, received a margin call or had their position closed out at a 10% loss). A: I like that you actually bother to read the

small print.

WHAT DOES OVER-THE-COUNTER OTC MEAN? The general public know over-the-counter or OTC as a term used for pharmaceuticals, which denotes that a drug can be bought freely. The opposite to this is a drug that is only available on prescription. However, when you start trading you find that this description can also be applied to financial securities. LONG TERM TRADING STRATEGIES WITH CFDS Longer term trading with CFDs involves the classic buy and hold. If you have read about contracts for difference on other websites, you may be wondering about whether they are a wise choice for long term

trading positions.

HOW TO PREVENT YOUR SHARES HOLDINGS FROM BEING SHORTED Q: Why does short selling reduce share prices? A: To short-sell a share speculators have to borrow the shares in the first place. Once they have done this they need to sell them in the market, and if this is done en-masse it can push the share price of a company down in the short term as there are more sellers than buyers in the market. IS SHORTING BAD? IS SHORT SELLING EVIL? A: Generally, short selling is seen as a necessary, indeed desirable, feature of the market. If you want to argue that prices should reflect all information, both good and bad, then you have to have short-selling. Indeed, when the USA banned shorting in late 2008 the markets started a steep decline.

CFDS IN NEW ZEALAND

CMC Markets is claimed to be New Zealand’s leading CFD (Contract for Difference) provider having moved into the market in April 2006 and opened an office in Auckland. For instance in just one week in October 2008 CMC Markets reported a total trade count of 33,516 with turnover amounting to more than NZD$1.44bn across all instruments. SMALL CAP SHARES VS. BLUE CHIP STOCKS Small Cap Shares vs. Blue Chip Stocks. How do they compare? The larger shares are traded in bulk by investment houses, as well as being available for the private trader. As you are trading with CFDs, there is another factor, and that is the margin or deposit required. WHY TRADE CFDS INSTEAD OF STOCKS? A: CFD trading is very similar to shares trading except that when you trade a contract for difference you don’t own the underlying share. Unlike investing in stocks, when you trade CFDs, you are not buying or trading the underlying asset. What you are buying is a contract between yourself and the CFD provider. The key difference between MOVING AVERAGES 20, 40, 60 AND 200 The shortest term average I use, SMA 20, which I like to colour red, is the signal to open a trade. The trade will be long or short, depending on the trend. For example, when the trend is up and the price is above the red line, I look at opening a long trade, buying the stock. The next average, SMA 40, the 40 day average, I usually

make green.

MIFID IMPLICATIONS

MiFID is a comprehensive regulatory regime covering investment services and financial markets in Europe and introduces common standards for investor protection throughout the European Union. Basically MiFID essentially relaxes the way shares can be sold, and one of the big impacts will be that companies based in the European

Union will be able

CHANGING MARGIN REQUIREMENTS After the HBOS price initially dipped 20%, before recovering to -10%, the margin requirement was changed to 100%. Anyone who had any leverage at all, received a margin call or had their position closed out at a 10% loss). A: I like that you actually bother to read the

small print.

WHAT DOES OVER-THE-COUNTER OTC MEAN? The general public know over-the-counter or OTC as a term used for pharmaceuticals, which denotes that a drug can be bought freely. The opposite to this is a drug that is only available on prescription. However, when you start trading you find that this description can also be applied to financial securities. LONG TERM TRADING STRATEGIES WITH CFDS Longer term trading with CFDs involves the classic buy and hold. If you have read about contracts for difference on other websites, you may be wondering about whether they are a wise choice for long term

trading positions.

HOW TO PREVENT YOUR SHARES HOLDINGS FROM BEING SHORTED Q: Why does short selling reduce share prices? A: To short-sell a share speculators have to borrow the shares in the first place. Once they have done this they need to sell them in the market, and if this is done en-masse it can push the share price of a company down in the short term as there are more sellers than buyers in the market. IS SHORTING BAD? IS SHORT SELLING EVIL? A: Generally, short selling is seen as a necessary, indeed desirable, feature of the market. If you want to argue that prices should reflect all information, both good and bad, then you have to have short-selling. Indeed, when the USA banned shorting in late 2008 the markets started a steep decline.

CFDS IN NEW ZEALAND

CMC Markets is claimed to be New Zealand’s leading CFD (Contract for Difference) provider having moved into the market in April 2006 and opened an office in Auckland. For instance in just one week in October 2008 CMC Markets reported a total trade count of 33,516 with turnover amounting to more than NZD$1.44bn across all instruments. SMALL CAP SHARES VS. BLUE CHIP STOCKS Small Cap Shares vs. Blue Chip Stocks. How do they compare? The larger shares are traded in bulk by investment houses, as well as being available for the private trader. As you are trading with CFDs, there is another factor, and that is the margin or deposit required. CFDS TRADING AND CONTRACTS FOR DIFFERENCES This is because contracts for difference are traded on margin, and the profit/loss is determined by the difference between the buy and the sell price. Because contracts for difference trade on margin, investors only need a small proportion of the total value of a position to trade. CFDs also mirror any corporate actions that take

place.

WHY TRADE CFDS INSTEAD OF STOCKS? A: CFD trading is very similar to shares trading except that when you trade a contract for difference you don’t own the underlying share. Unlike investing in stocks, when you trade CFDs, you are not buying or trading the underlying asset. What you are buying is a contract between yourself and the CFD provider. The key difference between HOW CFD PRICING WORKS Some CFD providers charge a fixed fee or commissions on cfd trades. The other alternative for traders is a quote-driven service, where investors are simply presented with their providers bid and offer prices. Another option is Direct Market Access which comes ready with

Level 2

CONTRACTS FOR DIFFERENCE Buying or selling the performance of a share through a CFD is almost identical to a physical equity trade financed by a loan. A client could borrow $20,000 from a bank to buy shares RISK PER TRADE AND POSITION SIZING Let’s take another example this time only risking 1% of the pot. If you have an account valued at £10,000 and you want to buy a stock at �12 with a stop loss at £11.90, then the number of shares (position) to trade is: Position Size = Maximum Risk Amount / Risk Per CFD. Position Size = (1% x account value) / (entry price – stop loss

CFD EXPIRY DATES

A: Unlike options and covered warrants cash-based CFDs don’t have an expiry date (futures-based CFD products do indeed have an expiry date that will be specified). As CFDs are traded on ‘margin’ you pay or receive an overnight financing rate linked to the London Inter Bank Offered Rate, (LIBOR). This means that you can keep them running

CFDS AND DIVIDENDS

On the ex dividend date you can expect the value of the shares to drop by nearly as much as the amount of the dividend, which maintains a level equity for the conventional shareholder. What this means in practice is that your long CFD position can be expected to take a hit, even while you are receiving funds for the dividend amount. PAIRS TRADING WITH CFDS Pairs trading (sometimes known as statistical arbitrage, or a market neutral strategy) is a trading strategy that has become popular since the advent of CFDs (about 20 years ago), prior to this it was hard for a trader to short sell. Pairs trading is the action of an investor buying into one instrument and simultaneously selling another – it SMALL CAP SHARES VS. BLUE CHIP STOCKS Small Cap Shares vs. Blue Chip Stocks. How do they compare? The larger shares are traded in bulk by investment houses, as well as being available for the private trader. As you are trading with CFDs, there is another factor, and that is the margin or deposit required. TRADING CFDS ON MARGIN VERSUS BORROWING TO BUY SHARES Q: What is the difference between trading CFDs on margin and traditional margin trading? A:. Usually you need to have 100% of the cash available to buy a share. In some cases you can take out a margin loan and borrow to invest but you will still be required to have about 40% of the investment in cash. WHY TRADE CFDS INSTEAD OF STOCKS? A: CFD trading is very similar to shares trading except that when you trade a contract for difference you don’t own the underlying share. Unlike investing in stocks, when you trade CFDs, you are not buying or trading the underlying asset. What you are buying is a contract between yourself and the CFD provider. The key difference between MOVING AVERAGES 20, 40, 60 AND 200 The shortest term average I use, SMA 20, which I like to colour red, is the signal to open a trade. The trade will be long or short, depending on the trend. For example, when the trend is up and the price is above the red line, I look at opening a long trade, buying the stock. The next average, SMA 40, the 40 day average, I usually

make green.

MIFID IMPLICATIONS

MiFID is a comprehensive regulatory regime covering investment services and financial markets in Europe and introduces common standards for investor protection throughout the European Union. Basically MiFID essentially relaxes the way shares can be sold, and one of the big impacts will be that companies based in the European

Union will be able

HOW MARKET MAKERS WORK How Market Makers Work. As opposed to DMA brokers who pass the client’s CFD order to the exchange with a trade in the underlying asset, market makers may assume the risk of a trade by taking on proprietary positions as a result of customer order flow. The CFD market maker provides price quotes for clients to transact with, in

the process

PAIRS TRADING WITH CFDS Pairs trading (sometimes known as statistical arbitrage, or a market neutral strategy) is a trading strategy that has become popular since the advent of CFDs (about 20 years ago), prior to this it was hard for a trader to short sell. Pairs trading is the action of an investor buying into one instrument and simultaneously selling another – it HEDGING CLIENT POSITIONS The point being that if you enter into a CFD, the broker is obligated to hedge that bet in the market, but this obligation doesn’t exist in spread betting. A: First of all, you don’t have it all that far off from what is the case. Simplified, the key difference is that

spreads

LONG TERM TRADING STRATEGIES WITH CFDS Longer term trading with CFDs involves the classic buy and hold. If you have read about contracts for difference on other websites, you may be wondering about whether they are a wise choice for long term

trading positions.

WHY ARE CFDS NOT PERMITTED IN THE USA? The main reason why CFD trading is not available to US traders is because it is against US securities law. Over the counter financial instruments, such as CFDs, are heavily regulated through legislation like the Dodd Frank Act and enforced by the SEC (Securities and Exchange Commission). This power was granted under Title Vii of the

act when

IS SHORTING BAD? IS SHORT SELLING EVIL? A: Generally, short selling is seen as a necessary, indeed desirable, feature of the market. If you want to argue that prices should reflect all information, both good and bad, then you have to have short-selling. Indeed, when the USA banned shorting in late 2008 the markets started a steep decline. HOW TO PREVENT YOUR SHARES HOLDINGS FROM BEING SHORTED Q: Why does short selling reduce share prices? A: To short-sell a share speculators have to borrow the shares in the first place. Once they have done this they need to sell them in the market, and if this is done en-masse it can push the share price of a company down in the short term as there are more sellers than buyers in the market. WHY TRADE CFDS INSTEAD OF STOCKS? A: CFD trading is very similar to shares trading except that when you trade a contract for difference you don’t own the underlying share. Unlike investing in stocks, when you trade CFDs, you are not buying or trading the underlying asset. What you are buying is a contract between yourself and the CFD provider. The key difference between MOVING AVERAGES 20, 40, 60 AND 200 The shortest term average I use, SMA 20, which I like to colour red, is the signal to open a trade. The trade will be long or short, depending on the trend. For example, when the trend is up and the price is above the red line, I look at opening a long trade, buying the stock. The next average, SMA 40, the 40 day average, I usually

make green.

MIFID IMPLICATIONS

MiFID is a comprehensive regulatory regime covering investment services and financial markets in Europe and introduces common standards for investor protection throughout the European Union. Basically MiFID essentially relaxes the way shares can be sold, and one of the big impacts will be that companies based in the European

Union will be able

HOW MARKET MAKERS WORK How Market Makers Work. As opposed to DMA brokers who pass the client’s CFD order to the exchange with a trade in the underlying asset, market makers may assume the risk of a trade by taking on proprietary positions as a result of customer order flow. The CFD market maker provides price quotes for clients to transact with, in

the process

PAIRS TRADING WITH CFDS Pairs trading (sometimes known as statistical arbitrage, or a market neutral strategy) is a trading strategy that has become popular since the advent of CFDs (about 20 years ago), prior to this it was hard for a trader to short sell. Pairs trading is the action of an investor buying into one instrument and simultaneously selling another – it HEDGING CLIENT POSITIONS The point being that if you enter into a CFD, the broker is obligated to hedge that bet in the market, but this obligation doesn’t exist in spread betting. A: First of all, you don’t have it all that far off from what is the case. Simplified, the key difference is that

spreads

LONG TERM TRADING STRATEGIES WITH CFDS Longer term trading with CFDs involves the classic buy and hold. If you have read about contracts for difference on other websites, you may be wondering about whether they are a wise choice for long term

trading positions.

WHY ARE CFDS NOT PERMITTED IN THE USA? The main reason why CFD trading is not available to US traders is because it is against US securities law. Over the counter financial instruments, such as CFDs, are heavily regulated through legislation like the Dodd Frank Act and enforced by the SEC (Securities and Exchange Commission). This power was granted under Title Vii of the

act when

HOW TO PREVENT YOUR SHARES HOLDINGS FROM BEING SHORTED Q: Why does short selling reduce share prices? A: To short-sell a share speculators have to borrow the shares in the first place. Once they have done this they need to sell them in the market, and if this is done en-masse it can push the share price of a company down in the short term as there are more sellers than buyers in the market. IS SHORTING BAD? IS SHORT SELLING EVIL? A: Generally, short selling is seen as a necessary, indeed desirable, feature of the market. If you want to argue that prices should reflect all information, both good and bad, then you have to have short-selling. Indeed, when the USA banned shorting in late 2008 the markets started a steep decline. CONTRACTS FOR DIFFERENCE Buying or selling the performance of a share through a CFD is almost identical to a physical equity trade financed by a loan. A client could borrow $20,000 from a bank to buy shares WHY TRADE CFDS INSTEAD OF STOCKS? A: CFD trading is very similar to shares trading except that when you trade a contract for difference you don’t own the underlying share. Unlike investing in stocks, when you trade CFDs, you are not buying or trading the underlying asset. What you are buying is a contract between yourself and the CFD provider. The key difference between HOW CFD PRICING WORKS Some CFD providers charge a fixed fee or commissions on cfd trades. The other alternative for traders is a quote-driven service, where investors are simply presented with their providers bid and offer prices. Another option is Direct Market Access which comes ready with

Level 2

HEDGING CLIENT POSITIONS The point being that if you enter into a CFD, the broker is obligated to hedge that bet in the market, but this obligation doesn’t exist in spread betting. A: First of all, you don’t have it all that far off from what is the case. Simplified, the key difference is that

spreads

CFD TRADING EXAMPLES Trading Example. It is early February and you decide Tesco is looking cheap. The share is quoted at 246.5/248.0p in the market, and you buy 10,000 shares as a CFD at 248p, the offer price. The commission on the transaction is 0.10% or £24.8 (10,000 shares x 248p x 0.10%). There is no stamp duty to pay. CFDS AND INITIAL MARGIN When you trade Contracts for Difference (CFDs), you can take a position in an asset which is more than the money you have available. This is called leveraging or gearing your money. However, you will need to have a certain amount in your account to be able to open the position, and this is called the initial margin. TRADING THE S&P 500 WITH CFDS To get some exposure to the US markets, you might want to consider trading contracts for difference (CFDs) on the S&P 500. The Dow covers 30 of the major blue-chip US companies, but the S&P 500 is compiled from the share values of 500 largest companies, WHY ARE CFDS NOT PERMITTED IN THE USA? The main reason why CFD trading is not available to US traders is because it is against US securities law. Over the counter financial instruments, such as CFDs, are heavily regulated through legislation like the Dodd Frank Act and enforced by the SEC (Securities and Exchange Commission). This power was granted under Title Vii of the

act when

CFDS AND DIVIDENDS

On the ex dividend date you can expect the value of the shares to drop by nearly as much as the amount of the dividend, which maintains a level equity for the conventional shareholder. What this means in practice is that your long CFD position can be expected to take a hit, even while you are receiving funds for the dividend amount.

CFDS IN NEW ZEALAND

CMC Markets is claimed to be New Zealand’s leading CFD (Contract for Difference) provider having moved into the market in April 2006 and opened an office in Auckland. For instance in just one week in October 2008 CMC Markets reported a total trade count of 33,516 with turnover amounting to more than NZD$1.44bn across all instruments. WHY TRADE CFDS INSTEAD OF STOCKS? A: CFD trading is very similar to shares trading except that when you trade a contract for difference you don’t own the underlying share. Unlike investing in stocks, when you trade CFDs, you are not buying or trading the underlying asset. What you are buying is a contract between yourself and the CFD provider. The key difference between MOVING AVERAGES 20, 40, 60 AND 200 The shortest term average I use, SMA 20, which I like to colour red, is the signal to open a trade. The trade will be long or short, depending on the trend. For example, when the trend is up and the price is above the red line, I look at opening a long trade, buying the stock. The next average, SMA 40, the 40 day average, I usually

make green.

MIFID IMPLICATIONS

MiFID is a comprehensive regulatory regime covering investment services and financial markets in Europe and introduces common standards for investor protection throughout the European Union. Basically MiFID essentially relaxes the way shares can be sold, and one of the big impacts will be that companies based in the European

Union will be able

HOW MARKET MAKERS WORK How Market Makers Work. As opposed to DMA brokers who pass the client’s CFD order to the exchange with a trade in the underlying asset, market makers may assume the risk of a trade by taking on proprietary positions as a result of customer order flow. The CFD market maker provides price quotes for clients to transact with, in

the process

PAIRS TRADING WITH CFDS Pairs trading (sometimes known as statistical arbitrage, or a market neutral strategy) is a trading strategy that has become popular since the advent of CFDs (about 20 years ago), prior to this it was hard for a trader to short sell. Pairs trading is the action of an investor buying into one instrument and simultaneously selling another – it HEDGING CLIENT POSITIONS The point being that if you enter into a CFD, the broker is obligated to hedge that bet in the market, but this obligation doesn’t exist in spread betting. A: First of all, you don’t have it all that far off from what is the case. Simplified, the key difference is that

spreads

LONG TERM TRADING STRATEGIES WITH CFDS Longer term trading with CFDs involves the classic buy and hold. If you have read about contracts for difference on other websites, you may be wondering about whether they are a wise choice for long term

trading positions.

WHY ARE CFDS NOT PERMITTED IN THE USA? The main reason why CFD trading is not available to US traders is because it is against US securities law. Over the counter financial instruments, such as CFDs, are heavily regulated through legislation like the Dodd Frank Act and enforced by the SEC (Securities and Exchange Commission). This power was granted under Title Vii of the

act when

IS SHORTING BAD? IS SHORT SELLING EVIL? A: Generally, short selling is seen as a necessary, indeed desirable, feature of the market. If you want to argue that prices should reflect all information, both good and bad, then you have to have short-selling. Indeed, when the USA banned shorting in late 2008 the markets started a steep decline. HOW TO PREVENT YOUR SHARES HOLDINGS FROM BEING SHORTED Q: Why does short selling reduce share prices? A: To short-sell a share speculators have to borrow the shares in the first place. Once they have done this they need to sell them in the market, and if this is done en-masse it can push the share price of a company down in the short term as there are more sellers than buyers in the market. WHY TRADE CFDS INSTEAD OF STOCKS? A: CFD trading is very similar to shares trading except that when you trade a contract for difference you don’t own the underlying share. Unlike investing in stocks, when you trade CFDs, you are not buying or trading the underlying asset. What you are buying is a contract between yourself and the CFD provider. The key difference between MOVING AVERAGES 20, 40, 60 AND 200 The shortest term average I use, SMA 20, which I like to colour red, is the signal to open a trade. The trade will be long or short, depending on the trend. For example, when the trend is up and the price is above the red line, I look at opening a long trade, buying the stock. The next average, SMA 40, the 40 day average, I usually

make green.

MIFID IMPLICATIONS

MiFID is a comprehensive regulatory regime covering investment services and financial markets in Europe and introduces common standards for investor protection throughout the European Union. Basically MiFID essentially relaxes the way shares can be sold, and one of the big impacts will be that companies based in the European

Union will be able

HOW MARKET MAKERS WORK How Market Makers Work. As opposed to DMA brokers who pass the client’s CFD order to the exchange with a trade in the underlying asset, market makers may assume the risk of a trade by taking on proprietary positions as a result of customer order flow. The CFD market maker provides price quotes for clients to transact with, in

the process

PAIRS TRADING WITH CFDS Pairs trading (sometimes known as statistical arbitrage, or a market neutral strategy) is a trading strategy that has become popular since the advent of CFDs (about 20 years ago), prior to this it was hard for a trader to short sell. Pairs trading is the action of an investor buying into one instrument and simultaneously selling another – it HEDGING CLIENT POSITIONS The point being that if you enter into a CFD, the broker is obligated to hedge that bet in the market, but this obligation doesn’t exist in spread betting. A: First of all, you don’t have it all that far off from what is the case. Simplified, the key difference is that

spreads

LONG TERM TRADING STRATEGIES WITH CFDS Longer term trading with CFDs involves the classic buy and hold. If you have read about contracts for difference on other websites, you may be wondering about whether they are a wise choice for long term

trading positions.

WHY ARE CFDS NOT PERMITTED IN THE USA? The main reason why CFD trading is not available to US traders is because it is against US securities law. Over the counter financial instruments, such as CFDs, are heavily regulated through legislation like the Dodd Frank Act and enforced by the SEC (Securities and Exchange Commission). This power was granted under Title Vii of the

act when

IS SHORTING BAD? IS SHORT SELLING EVIL? A: Generally, short selling is seen as a necessary, indeed desirable, feature of the market. If you want to argue that prices should reflect all information, both good and bad, then you have to have short-selling. Indeed, when the USA banned shorting in late 2008 the markets started a steep decline. HOW TO PREVENT YOUR SHARES HOLDINGS FROM BEING SHORTED Q: Why does short selling reduce share prices? A: To short-sell a share speculators have to borrow the shares in the first place. Once they have done this they need to sell them in the market, and if this is done en-masse it can push the share price of a company down in the short term as there are more sellers than buyers in the market. CONTRACTS FOR DIFFERENCE Buying or selling the performance of a share through a CFD is almost identical to a physical equity trade financed by a loan. A client could borrow $20,000 from a bank to buy shares WHY TRADE CFDS INSTEAD OF STOCKS? A: CFD trading is very similar to shares trading except that when you trade a contract for difference you don’t own the underlying share. Unlike investing in stocks, when you trade CFDs, you are not buying or trading the underlying asset. What you are buying is a contract between yourself and the CFD provider. The key difference between HOW CFD PRICING WORKS Some CFD providers charge a fixed fee or commissions on cfd trades. The other alternative for traders is a quote-driven service, where investors are simply presented with their providers bid and offer prices. Another option is Direct Market Access which comes ready with

Level 2

HEDGING CLIENT POSITIONS The point being that if you enter into a CFD, the broker is obligated to hedge that bet in the market, but this obligation doesn’t exist in spread betting. A: First of all, you don’t have it all that far off from what is the case. Simplified, the key difference is that

spreads

CFD TRADING EXAMPLES Trading Example. It is early February and you decide Tesco is looking cheap. The share is quoted at 246.5/248.0p in the market, and you buy 10,000 shares as a CFD at 248p, the offer price. The commission on the transaction is 0.10% or £24.8 (10,000 shares x 248p x 0.10%). There is no stamp duty to pay. CFDS AND INITIAL MARGIN When you trade Contracts for Difference (CFDs), you can take a position in an asset which is more than the money you have available. This is called leveraging or gearing your money. However, you will need to have a certain amount in your account to be able to open the position, and this is called the initial margin. TRADING THE S&P 500 WITH CFDS To get some exposure to the US markets, you might want to consider trading contracts for difference (CFDs) on the S&P 500. The Dow covers 30 of the major blue-chip US companies, but the S&P 500 is compiled from the share values of 500 largest companies, WHY ARE CFDS NOT PERMITTED IN THE USA? The main reason why CFD trading is not available to US traders is because it is against US securities law. Over the counter financial instruments, such as CFDs, are heavily regulated through legislation like the Dodd Frank Act and enforced by the SEC (Securities and Exchange Commission). This power was granted under Title Vii of the

act when

CFDS AND DIVIDENDS

On the ex dividend date you can expect the value of the shares to drop by nearly as much as the amount of the dividend, which maintains a level equity for the conventional shareholder. What this means in practice is that your long CFD position can be expected to take a hit, even while you are receiving funds for the dividend amount.

CFDS IN NEW ZEALAND

CMC Markets is claimed to be New Zealand’s leading CFD (Contract for Difference) provider having moved into the market in April 2006 and opened an office in Auckland. For instance in just one week in October 2008 CMC Markets reported a total trade count of 33,516 with turnover amounting to more than NZD$1.44bn across all instruments.

__

CFD Trading and Contracts for Differences

* Home

* CFDs Explained

* CFDs Explained

* CFD Trading Examples * Interactive Examples

* History

* CFD Basics

* FAQs

* Compare CFD Brokers

* Contact

* __

* __

Uncategorized

STARTING TO TRADE STOCKS

Uncategorized

AMOUNT TO RISK AND POSITION SIZING

Uncategorized

SHORTING AND THE IMPORTANCE OF TIMING

Course

FINDING AND RESEARCHING TRADES

Course

CONCEPTS OF TRADING A LEVERAGED PRODUCT

Uncategorized

BEWARE VERY LOW CFD MARGINS

Uncategorized

STARTING TO TRADE STOCKS

Uncategorized

AMOUNT TO RISK AND POSITION SIZING

Uncategorized

SHORTING AND THE IMPORTANCE OF TIMING

Course

FINDING AND RESEARCHING TRADES

Course

CONCEPTS OF TRADING A LEVERAGED PRODUCT

Uncategorized

BEWARE VERY LOW CFD MARGINS

__

__

AYONDO

AYONDO: FOLLOW YOUR TOP-TRADER “Most retail investors are interested in keeping up with modern forms of trading, such as social... AYONDO TRADING PLATFORM

SOCIAL TRADING

CORESPREADS

A NEW TRADER’S ROUGH GUIDE TO METATRADER 4 Metatrader 4 is the most recognised online platform offered by the majority of brokers who cater to... METATRADER (MT4) TIPS AND TRICKS THE SUCCESSFUL DUO – METATRADER 4 AND CORESPREADS USING CFDS TO TRADE AND INVEST! Contracts for difference offer all the benefits of trading shares without having to physically own them. Contracts for difference (aka CFDs) mirror the performance of a share or an index. A CFD is in essence an agreement between the buyer and seller to exchange the difference in the current value of a share, currency, commodity or index and its value at the end of the contract. If the difference is positive, the seller pays the buyer. If it is negative, the buyer is the one who loses money. The leveraged derivative products allow investors to speculate on price movements without needing to own the underlying asset. This is because contracts for difference are traded on margin, and the profit/loss is determined by the difference between the buy and the sell price. Because contracts for difference trade on margin, investors only need a small proportion of the total value of a

position to trade.

CFDs also mirror any corporate actions that take place. The owner of a share CFD will receive cash dividends and participate in stock splits. CFDs are not suitable for 'buy and forget' trading or long-term positions. Each day you maintain the position it costs money (if you are long), so there is a time when CFDs become expensive. For short-term trading they have advantages, provided you get the markets right. But be prepared at some economic stage to cut the position. Contracts for difference (CFDs) are instruments that offer exposure to the markets at a small percentage of the cost of owning the actual share. This allows the investor to buy or sell an instrument, which usually costs only 10 per cent of the price of the underlying share. It offers great leverage opportunities. Commission is normally charged at 0.10% of the contracts for difference contract face value on both opening and closing a transaction. Some brokers use real prices with no hidden charges added to the bid/offer spread, and fees are levied separately. Others claim to offer commission-free trades, but the cost is usually factored into

the spread.

The capacity to short assets also offers investors the possibility for pairs trading, where a trader buys a share and, at the same time, sells exactly the same amount of another share, usually in the same sector. The expectation is that the long share will outperform the short one. Here, you are betting on the relative performance of the two shares rather than their actual performance. Contracts for difference provide an excellent vehicle for short term trading strategies and are the preferred vehicle amongst hedge funds and professional traders. Trading the UK stock market through more traditional means is both cost prohibitive and cumbersome. Financial spread betting enjoys a higher growth rate, and acts as an effective entry level product, allowing the individual a lower level of financial commitment. However, ultimately the more professional player will be unwilling to trade indefinitely on someone else's prices. Current estimates of CFD activity suggest that approximately 10-15% of total daily transactions on the Australian Stock Exchange are now backed by CFD trades. In the UK it is estimated that CFD-backed trades account for approximately 25-30% of equity trades on the London Stock

Exchange.

You should be aware, there are two different types of contracts for difference providers, one is more like a traditional spread better where you are trading with the CFD provider and have to trade on their prices. With the other provider, your contracts for difference orders or more strictly the hedge for your CFD orders is sent directly to the LSE order book. With the second provider you can send a limit order to buy on the bid / sell on the ask and avoid paying the spread if someone should decide to hit your bid / lift your offer. The first type of provider is more prevalent and will normally charge a lower commission, but you still have to deal with the normal spread betting bias issues there. "Proper" CFD providers like eTrade typically charge more in commission. With the spread betting type CFD the prices you trade on as the providers, with the direct CFD you are dealing on live prices from the market. It is important to understand the distinction.

FRESH TOPICS

Tactics

LEARNING TO TRADE: TRADING EXPERIENCE My Grandmother used to tell me that ‘you can’t put an old head on

young...

Tactics

THE DANGERS OF OVERTRADING Avoid the temptation to overtrade. Traders who do not have a clear pre-determined strategy are more...

Tactics

WHERE DO YOU PLACE THE STOP LOSS? Where do you place the stop loss? Learning to accept plenty of small losses allows you to protect...

Tactics

CFD TRADING USING STOP LOSSES Making money in the markets requires a trader to predict the market direction and make trades that...

Tactics

LEARNING TO TRADE: INFORMATION OVERLOAD AND ANALYSIS PARALYSIS The issue for the novice trader is that there is so much stuff out there that doesn’t work...

Tactics

LEARNING TO TRADE: TRADING EXPERIENCE My Grandmother used to tell me that ‘you can’t put an old head on

young...

Tactics

THE DANGERS OF OVERTRADING Avoid the temptation to overtrade. Traders who do not have a clear pre-determined strategy are more...

Tactics

WHERE DO YOU PLACE THE STOP LOSS? Where do you place the stop loss? Learning to accept plenty of small losses allows you to protect...

Tactics

CFD TRADING USING STOP LOSSES Making money in the markets requires a trader to predict the market direction and make trades that...

__

__

WHY TRADE CFDS?

SELF INVESTED PERSONAL PENSIONS AND CONTRACTS FOR DIFFERENCE CONTRACTS FOR DIFFERENCE SIPPS HEDGING EXPOSURE ON CFDS

WHY TRADE CFDS?

CFDS ON OTHER INSTRUMENTS

INDEX CFDS

TRADE: SHORT ON KAZAKHMYS (KAZ.L) MORE ON CFDS TRADING AVOID COSTLY CFD MISTAKES SELF INVESTED PERSONAL PENSIONS (SIPPS) AND CFDS SELF INVESTED PERSONAL PENSIONS AND CONTRACTS FOR DIFFERENCE CONTRACTS FOR DIFFERENCE SIPPS HEDGING EXPOSURE ON CFDS

WHY TRADE CFDS?

CFDS ON OTHER INSTRUMENTS

INDEX CFDS

TRADE: SHORT ON KAZAKHMYS (KAZ.L) MORE ON CFDS TRADING AVOID COSTLY CFD MISTAKES SELF INVESTED PERSONAL PENSIONS (SIPPS) AND CFDS

__

__

WHY TRADE CFDS

MARKETS

27 articles

STRATEGIES

57 articles

WHY TRADE CFDS

30 articles

HOW CFDS ARE PRICED

11 articles

MARKETS

27 articles

STRATEGIES

57 articles

WHY TRADE CFDS

30 articles

HOW CFDS ARE PRICED

11 articles

__

__

HOT RIGHT NOW

Trade with an ASIC Regulated Provider CoreSpreads offer tight, fixed spreads and competitive financing

charges.

Open Account at CoreSpreads Trading is Risky. 59.9% of retail CFD accounts lose money.

CATEGORIES

* Why Trade CFDs30

* How CFDs are Priced11

* Course126

* Strategies57

* Tactics31

*

be

created on the underlying price of any asset. However there are a number of assets that are too hard or costly to price and/or don't move quickly enough to be financially viable which is why most CFD providers will provide a standard set of instruments to trade. This standard can vary greatly or slightly depending on the broker you choose and their trading policies but there is slight standardization between the different brokers. When determining the best CFD market to trade liquidity should be high on your priority list. It is pointless to see your trade gaining some 30% only to drop 20% as you attempt to exit the position due to low liquidity. Do you plan to trade on a short-term basis? The best market for day traders to deal in is undoubtedly a fast moving one as it allows you to make profits quickly. You will also have to take into consideration the time you have available to trade. What is the right time frame for you to trade? This really depends on your personality. You have to feel comfortable with the time frame you are trading in. There is always some pressure when you are trading as there is the potential for loss or gain and that will effect you to some degree and this is why you need to dedicate some uninterrupted, quiet time where you can focus on your trading. Many traders in the United Kingdom who have a 9 to 5 day job may find that the S&P500 or Nikkei are the best CFD index markets to trade as they are open after work. If you have young children, the forex markets may be more appropriate as they are highly liquid and trade round-the-clock which means you can trade them when the kids are sleeping. To sum up, if you have a proven trading system and a sound method of trading your chosen market, you should be able to take that approach and apply it to any time frame on a consistent

basis.">Markets27

*

.

Some investors consider CFDs, futures and spread betting as roughly similar products and although it is true that they all basically work in a similar way, there are a number of differences that need to be considered. Futures and spread betting are virtually identical and in fact spread betting providers often base contracts around an underlying futures product although spread bets differ from futures in the sense that they are exempt from Capital Gains Tax. CFDs are subject to CGT but are more transparent than spread betting and the difference between bid and offer prices is usually always tighter than spreadbets. CFDs also have no minimum deal size or minimum deposit requirement. In the range of financial market instruments used for speculation such as futures, options and covered warrants, contracts for differences are rated higher due to their relatively easier accessibility, lower costs, price simplicity and wider range of underlying instruments. A CFD can be compared to -: -- An equity swap with no determined expiry date that is in effect financed by cash margin. A CFD is a derivative of an underlying asset and forgoes the advantages of owning the underlying instrument on a direct basis for a product that is traded on margin and thus allows more leverage. -- A single stock future. In effect stock futures share similar characteristics to CFDs but stock futures allow the transfer of the underlying asset on expiry (with CFDs, this isn't normally possible. It is worth noting that CFDs, spread bets and futures are all not subject to stamp duty as they don't involve ownership of the underlying asset on which they are based. In this section we will find out more about CFDs, how they work and the differences between CFDs and other financial products.">Compare14

*

at a lower (or higher price than the market is presently trading at. When the market hits your price, the order is triggered. Limit orders are usually used to exit a trade at a profit. CFD traders may also want to utilise these types of orders when they are on the sidelines waiting for stock prices to move close to a support or resistance level before taking a position. If aiming to lock-in gains on a short position, a limit order to buy would be placed at a level below current market prices. -- A stop order enables you to close a CFD position below the current market price and is the main means stock market traders use to manage risk on each trade that they take out. i.e. Stop loss orders are located at a level that's worse than prices currently obtainable in the market. On a long CFD trade, the stop loss level to sell would be placed below the current market price. -- Other online order types include if-done orders and one cancels other orders.. The types of orders available will depend on the CFD broker that you use, but usually these more advanced order types allow you to link different order types together to execute more of your trading strategy in one go. Here you are basically setting up an entire trade start to finish: when to get in and when to get out. -- Good till cancelled. is an additional ruling to a simple day order, GTC means that the order will keep running until either the price level is reached and filled or the order is cancelled. -- Trailing stops. Here you set your stop to trail the market price to help capture additional profits while minimising losses. -- Scale-out orders. allow you to exit the market in fractions of your original order. Like a parent and contingent order, you can set up an entire trade, but the order is applied if you’re trading more than one contract. -- Guaranteed stops. Most orders do not guarantee that your position is exited at the exact level you initially specified.. For an extra fee, this type of order guarantees execution at your specified price. (However, note that this order type is only available on market maker platforms and remember to check your market before you use this type of order as it may not be available for all markets ">Stops8

* Risks17

* CFD Brokers38

* Announcements5

* Broker News22

* Financial Updates4 * Industry Happenings25

* Industry News65

* Uncategorized4

FEATURED POSTS

*

Ayondo Trading Platform

*

Social Trading

*

Ayondo: Follow your Top-Trader

*

Ayondo Trading Platform

*

Social Trading

*

Ayondo: Follow your Top-Trader

*

Ayondo Trading Platform

__

__

RECOMMENDED PROVIDERS

*

*

MOST POPULAR

*

Ayondo Trading Platform

*

Ayondo: Follow your Top-Trader

*

Social Trading

TALKED ABOUT

*

Rotational Trading Strategy

*

Average Directional Movement Index (ADX) applied to...

*

Trading CFDs Short Term or Long Term?

VIDEO OF THE DAY

Copyright © 2018. Protected by CopyScape.

* About Us

* Risk Warning

* Affiliates

* Domain Name Opportunities

* Copyright

* Contact Us

__

* Home

* CFDs Explained

* CFDs Explained

* CFD Trading Examples * Interactive Examples

* History

* CFD Basics

* FAQs

* Compare CFD Brokers

* Contact

* __

* __