CFD trading and potential losses

Hello,

I am trying to understand losses on CFD trading for practice, can someone please shine some light on what my maximum loss would be if I shorted $10,000 of a CFD share using 1:5 (20%) leverage? I am starting with a $2000 initial deposit.

Thank you

 

Infinite, the share price could go to infinity.

 

Hey Mav,

Odds are against you.

My old FB wallpaper, used it to remind myself :



Based on the question , - you're beginner, thus check the link bellow, read the whole thread & forget about CFD's, leverage & shorting for the next ~2 years :

https://www.elitetrader.com/et/thre...bs-who-wants-to-be-a-full-time-trader.357710/

 

Depends where you are located. If you are in Europe, your loss is capped at your initial deposit. It might be different in other markets.

 

That is incorrect.

 

I assume that he was sloppy and meant European Union/ESMA - was it that you remarked about or something else?

 

Maybe a few brokers offer it as a promotion, but usually losses are uncapped.

 

You just need to study how all this happens in order to avoid unpleasant consequences.

 

Ok. Send that message to ESMA. They beg to differ:
https://www.esma.europa.eu/press-ne...intervention-measures-cfds-and-binary-options

 

To follow the rules are considered a promotion? This has been part of the ESMA rules since August 1st 2018: "Negative balance protection on a per account basis. This will provide an overall guaranteed limit on retail client losses"

The details can be found here: https://eur-lex.europa.eu/legal-con...2018.136.01.0050.01.ENG&toc=OJ:L:2018:136:TOC