Contract For Difference Basically the same as buying the underlying but you have leverage anywhere from probably 2:1 - 20:1 on stocks and 100:1 i believe on indexes. They are in Australia and the UK and maybe elsewhere aswell
Not really. CFD's grew in popularity as a way to get around the UK stamp duty, a transaction tax on equity trades. They initially existed in response to an unfree market. We have them in Canada, but they don't impress me at all. I prefer futures trading through U.S brokerages, for many reasons. To the OP: You'll be getting to know your brokers risk department.
I'm currently swing trading with CFD's and i am not leveraging myself up much at all, but it scares me that in the rare event of a huge gap against me (I dont hold over earnings anouncements) i could potentially get almost wiped out overnight. Needless to say i intend on moving to options soon to cap my max potential loss in an armageddon type situation.
We need a gambling for dummies section on ET. Threads like this would all be moved there, and every new thread would be auto-ignored for all... But bots would auto-generate random responses to make new posters like this feel they are being listened to...
I don´t recommend Cfd´s over futures. I guess the spread is larger and maybe some firms even trade against you. I don´t recommend "all in" if you don´t know what you are doing. Without money management you WILL lose everything. I don´t have a big fat wallet so i have to swing with my huuuge .... instead.. Trying to build a capital i mean.. If one already have $76378083 then what´s the point with taking risks? ALSO: With futures you can´t lose more than what´s in the account. With Cfd´s you can owe them money if something happens. That´s what the papers say at least. I guess it´s just a way around laws and difficult to make reality of. They would not get a $ from me. Just wanted to mention it.