About spread betting and CFDs

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About Spread Betting and CFD Trading

Spread betting and CFD trading are fast, exciting instruments for the smart investor, but the risks are high. So it’s not for everyone.

How do you tell whether it’s for you, and which product to use?

What’s your attitude towards risk?
If you’re usually made wary by the phrase “investments can go down as well as up” then neither spread betting or CFD trading are probably for you. If you’re comfortable with high risk investments and have the money to trade with, then spread betting or CFD trading could be an ideal way to trade.
Do you have the financial reserves?
Everyone wants to make money and with spread betting or CFD trading, the potential profits can be considerable. But so can the losses. Markets are volatile and can turn against you very quickly, leaving you highly exposed. If you don’t have the money to lose, don’t trade. Sensible traders always make sure they only risk what they can afford to lose.
What’s your experience of the markets?
It is important that you understand the dynamics of any instruments you trade via spread betting or CFD trading. Some markets move more quickly than others and so profits or losses can accumulate more quickly. Also remember that when trading on lower margin products your total exposure can be much larger.