Hot answers tagged

35

No, it's not a good idea. You started by saying you'd like to invest, but then mentioned something that's not an investment, it's a speculation. Both Forex and CFDs are not really investments. They are a zero sum game where over time, it's a pool of your money, the other trader's money, and the broker, redistributed over time. If you truly wish to invest, ...


21

Now the question: is advisable for a beginner to speculate in CfDs? No. If not, is there a better way to invest with a small amount of money? In the US, and I'm sure this carries to the UK, most (if not all) big brokerages (Schwab, TD Ameritrade, Fidelity, Vanguard, etc) have a set of funds that are zero load and zero commission though the fund will ...


10

If you have little investing experience, you shouldn't involve yourself in leveraged investments or short-term speculation at all. You will probably just lose money. If not, is there a better way to invest with a small amount of money? If you have little investing experience, you should not attempt to make a lot of money on a small investment at all. ...


9

The S&P500 is an index, not an investment by itself. The index lists a large number of stocks, and the value of the index is the price of all the stocks added together. If you want to make an investment that tracks the S&P500, you could buy some shares of each stock in the index, in the same proportions as the index. This, however, is impractical ...


7

A CFD broker will let you open a trade on margin as long as your account balance is more than the margin required on all your open trades. If the required margin increases within a certain percentage of your account balance, you will get a margin call. If you then don't deposit more funds or close losing trades out, the broker will close all your trades. ...


6

CFDs should not be used as a buy and hold strategy (which is risky enough doing with shares directly). However, with proper money and risk management and the proper use of stop losses, a medium term strategy is very plausible. I was using CFDs in the past over a short time period of usually between a couple of days to a couple is weeks, trying to catch ...


6

The economic effect of a CFD from your point of view is very close to the effect of owning the stock. If the stock goes up, you make money. If it goes down you lose money. If it pays a dividend, you get that dividend. You'll typically pay commission for buying and selling the CFDs in a similar way to the commission on stock purchases, though one of the ...


6

The service you are asking about does not let you buy stock directly. Rather than brokering or dealing in actual equities, they deal in financial betting instruments known as "contracts for differences", or CFDs. Notably: [in] the United States, where due to rules about over the counter products, CFDs cannot be traded by retail investors unless on a ...


5

Generally not, however some brokers may allow it. My previous CFD Broker - CMC Markets, used to allow you to adjust the leverage from the maximum allowed for that stock (say 5%) to 100% of your own money before you place a trade. So obviously if you set it at 100% you pay no interest on holding open long positions overnight. If you can't find a broker that ...


5

people claim that these sites are scams I would like to know which idiots or which website says so. And I would say you haven't done your research properly. At the bottom of the page you can see this, on IG's website, very important quote authorised and regulated by the Financial Conduct Authority Plus500UK Ltd is authorised and regulated by the Financial ...


5

The fees with trading CFDs are usually lower than standard share trading. There is usually no joining fee to join a broker and start trading with them, you must be talking about the minimum required to fund your account to trade with. What country are you in? Because if you are in the USA I believe CFD trading is not allowed there. Also there is no margin ...


5

Yes it is viable but uncommon. As with everything to do with investment, you have to know what you are doing and must have a plan. I have been successful with long term trading of CFDs for several years. It is true that the cost of financing to hold positions long term cuts into profits but so do the spreads and comissions when you trade frequently. You need ...


5

If you are trading CFDs, which are usually traded on margin, you will usually be charged an overnight financing fee for long positions held overnight and you will receive an overnight financing credit for short positions held overnight. Most CFD brokers will have their overnight financing rates set at + or - 2.5% or 3% from the country's official interest ...


5

However, is it a risk that they may withhold liquidity in a market panic crash to protect their own capital? Two cases exist here. One is if you access the direct market, then they cannot. Secondly if you are trading in the internal market created by them, yes they can do to save their behind, but that is open to question. They don't make money on your ...


5

Nothing gives a reliable 20-30% annually, especially not stocks. This is why people use margin, leverage, crypto and lose. Try to enjoy yourself!


4

It depends if you are with a direct market access provider or a market maker. With direct market access you are basically trading based on the liquidity of the under security. With a market maker the provider will try to match the liquidity of the underlying in most cases, but may differ from one provider to another.


4

IB's overnight financing cost for US CFDs below $100,000 is the Benchmark Rate + 1.5% for long positions and the Benchmark Rate -1.5% for short positions. You can check the IB CFD Contract Interest for their full list of financing costs for share CFDs. IB's commissions for an executed trade (where your monthly volume is below $300,000) is $0.005 per share ...


4

CFD providers typically offer CFDs to investors using either the direct market access (DMA) model or the market maker (MM) model. Direct Market Access The DMA model gives you access to trade the Underlying instrument on the relevant Exchange from which the CFD is then derived. All CFD Transactions under the DMA model have corresponding trades in the ...


4

An important point yet to be mentioned is that, with a standard investment, the most you can lose of your £100 stake is £100 (if the company literally goes bust, say). With shorting on the other hand, your downside is not limited to your initial stake. You could "invest" £100, but end up owing £200, £500, or, well, the sky's the limit. Shorting is ...


4

CFD's are highly speculative so they should represent a very small proportion of your asset allocation(4% or less). If you need the 100 for food or rent then definitely not. However if you have some money spare that you could afford to lose(you will definitely need more than 100) and you are prepared to put the time and effort it to learn and manage your ...


4

a bank doesn't lend you money if it hasn't made sure that you can repay your debt in full (plus interests). That's not entirely correct. The bank issues a lot of loans and expects almost all people will pay their debts. The few people who go bankrupt and cannot pay are (more than) compensated for by the people who do pay their debts. The same holds for ...


4

This was all luck, that amount of leverage will destroy your account in a single bad trade. You profit is way less than it should be because you are getting killed on fees. Take a look at the bitcoin trade, you should have 2,157.30 in profit but you only have 1825.42. And your currency trades were consistently positions that were worth $400,000 dollars, ...


4

Yes. Here's how: You borrow the stock from someone (paying them interest in return) You sell that stock on the open market If you want to close your position, or the person that you borrowed the stock from wants it back, you have to buy the stock back on the open market. You profit if you buy the stock back for a lower price than you sold it for. If the ...


4

In the medium term, you should consider low risk investments. Stocks are too likely to fluctuate in value over the course of 2 to 4 years. If your main goal is to get some return above your currency's inflation rate, consider finding a financial institution that offers accounts in USD or EUR with low risk savings options. If you get a 2% return on your USD ...


4

If you hold a short position CFD then you're liable for the dividend once the stock goes ex-dividend. If the stock somehow does not drop the entirety of the dividend amount you'll make money, if it drops more you'll lose. On average it's going to drop the amount of the dividend. Conversely if you're long on a CFD you receive the dividend (but the price of ...


4

CFDs are a form of derivative. In the Berkshire Hathaway annual report for 2002 derivatives are described like this... In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.


4

When gambling you can only lose as much money as you have. There are several things you can do with the stock market where your potential losses exceed several times your investment. This is one of them.


4

Companies only know about shore owners. They do not know about owners of CFDs or other derivatives like options. Remember that if you trade a CFD you do not own the stock - you enter into a contract to pay the difference between the stock price and some set value in the future. You are not investing in the company - you're making a bet about where the stock ...


3

A CFD is like a bet. Bookies don't own horses or racetracks but you still pay them and they pay you if the horses win. If you buy a CFD the money goes to the firm you bought it from and if the stock price changes in your favour, they will pay you. However, if it goes against you they may ask you for more money than you originally invested to cover your ...


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