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RISK OF TRADING CFDS
Remember CFDs are a type of derivative product based on underlying assets that can fall substantially as well as rise substantially, thus you can incur substantial losses as well as substantial gains when investing in CFDs. Derivatives are geared investment products, thus this increases the chances of substantial gains on an investment and equally increases the chances of substantial losses on an investment! CFDs are not ideal for private investors whom neither have substantial experience nor the time to monitor their CFD investment.
Notably, the private investor should remember that CFDs are not covered by stock exchange rules and CFDs are 'off-exchange' products.
- The geared nature if margin trading markets means that both profits and losses can be magnified and you could incur large losses if the market moves against you
- CFD Trading is less suited to the long term investor because if you hold an open CFD position over a long period of time the costs incurred increase and it may be more beneficial to have bought the underlying asset.
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