Thanks for posting your question. It helps us to know what people want to find out more about when we receive comments from readers.
I think this topic deserves it’s own blog post, so we will get to that soon, but very briefly, CFD’s are ‘Contracts for Difference’.
They are a leveraged instrument (eg, like options), that allows you to trade expected price movements in a stock or index without having to pay the full price of the stock or index. But unlike options, they don’t have an expiry date - instead you pay interest daily if you hold positions overnight.
I would certainly recommend caution when looking to trade CFD’s as leverage is a two-edged sword. There is certainly the opportunity to make some great profits when you pick the move correctly (as they are a “delta 1″ product), but without an effective trading system and money management strategy in place you can make some substantial losses as well.
Stay tuned, we’ll get a post up on CFD’s before long.
Cheers,
Brian Dibbins
Elite Insiders Group - Trading Systems
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