Understanding Bull And Bear Markets Contracts for Difference

Understanding Bull And Bear Markets Contracts for Difference, also known as CFDs, are a rapidly growing market attracting an increasing number of retail traders from around the world. Around 2001 a number of the CFD providers realized that CFDs had the same economic effect as financial spread betting in the UK except that spread betting profits were exempt from Capital Gains Tax Most CFD providers launched financial spread betting operations in parallel to their CFD offering. In the UK the CFD market mirrors the financial spread betting market and the products are in many ways the same. However unlike CFDs which have been exported to a number of different countries, spread betting relying on a country specific tax advantage has remained primarily a UK and Irish phenomenon. So, in other words money is made through speculation. As a student you can make loads of money and pay for your college debt, but you need to give yourself time to educate yourself on how it works Simply, because high leverage infers high risk. You need to analyze very carefully the markets you are going to trade on. Take your capital and interests into consideration before you jump into the online CFD trading arena. For example, if you think a specific market will rise you buy a CFD to trade it. This is the answer to how do CFDs work. Your profit will be considerably greater the further the market rises, and your losses greater the further it declines. The converse rule applies if you back a market to fail, so you will make more the further the market drops and lose more the further the market rises. Let’s assume your prediction was correct and the price rises over the next week to 110 / 112. You decide to close your buy trade by selling at 110 pence (the current sell price). Remember, commission is charged when you exit a trade too, so a charge of £11 would be applied when you close the trade, as 0.10% of the trade size is £11 (10,000 units x 110p = £11,000 x 0.10%).related articles: