CFD Trading

As promised some more info's about CFD (Contract for Difference) trading.

Facts about CFD's:

The trader isn't speculating against another trader like with warrants for example.

A CFD isn't a Financial Future nor comparable to a Option.A CFD haven't a date of expire eighter.It's a short time financial instrument and mainly used for daytrading with a huge choice of underlayings like currencies,stocks,indices etc.

A CFD have no subscibtion right on the underlaying as Futures or Options.

CFD's aren't stockmarket listed and get traded only OTC (Over the Counter).The price fixing is done by the broker himself at his own market place.

The CFD holder is positive and negativ participating on dividends of the underlaying.The "Short" invested trader will get the payed off dividend substracted,bad surprises can be happen by a lack of prepareration.:)

CFD trading is nothing as pure speculation on differences within a short time frame.

It's common to sell CFD's even without having them in the depot in the first place,the way to go short-that means the trader is aspecting falling quotes of the underlaying and buys the CFD's back as soon as she/he intents in fact to sell.The difference after the buy to the privious sell quote is the loss or gain of the trader on the short side.It's a bet on the contract difference (CFD-Contract for difference).

Of course is a reliable broker with fast and high order flow as well as realtime quotes precondition for CFD trading.

It's a financial field with high gain but also loss opportunities.The trader need to be 100% aware of sucessfull risk management and every tiny little detail about what she/he is doing.The leverage factor works both ways and shouldn't be underestimated.

I could write much more about derivative financial instruments,but this should be just a introduction in the interesting topic-CFD trading.:)

P.s.:
Check out the webside of Mr. Anthony Cloe,a proffesional CFD expert who did leave a comment to this posting:

Blog of Anthony Cloe