| The investor whom has selected to trade in the | | | | believe is going to rise. There is no time frame set in |
| contracts for difference sector needs to be aware | | | | the long position in CFD trading. The position will earn |
| of how to trade long and how to trade short. | | | | daily dividends if the underlying instruments are rising. |
| Generally you are placing your positions on the | | | | If the price takes a downward turn you will have to |
| underlying instrument, security or indices rising or | | | | pay the broker the difference. When going long if |
| falling. This will be a brief article explaining how each | | | | you do not close your position the same day then |
| works in an effort to help you develop your CFD | | | | you must pay a daily financing fee for each day the |
| trading strategy. | | | | position is open. Also, if the CFD is closed on the |
| Going 'short' - this means that the investor believes | | | | same day there will not be a stamp duty tax. |
| that the prices on products, indexes etc is going to | | | | As you can see when someone is CFD trading the |
| drop and will enter the contract. When the investor | | | | actual trader is earning their profit on the price |
| creates the short position within the CFDs deal they | | | | fluctuations of the underlying market, instrument, |
| believe that the price of that particular product is | | | | indices, shares, etc. There is actually no physical |
| going to plummet, and in the event it does, the | | | | product which will change hands; you are making your |
| broker will have to pay the difference. This is how | | | | profit or loss by the actual difference in the opening |
| many investors are able to create a large profit | | | | and the closing prices. |
| when going short. | | | | In closing, one must remember that CFDs can earn |
| If the price rises then the investor would have to | | | | the investor a large profit; however, it is quite a risky |
| pay the broker the loss which. If the position is not | | | | instrument to trade in as it is leveraged and a |
| opened and closed on the same day then a credit | | | | speculative market and if not carefully done can |
| shall be given from the broker and placed in the | | | | create a very large loss of capital to the investor. It |
| investors account. | | | | is best to fully understand all factors involving the |
| Going 'long' - this means that the investor would be | | | | CFD trading market. |
| creating the contract in a market for which they | | | | |