CFDs Are Best Traded Short-Term, Says IndependentInvestor.co.uk

Added: (Wed Feb 08 2012)

Pressbox (Press Release) - Contracts for difference are best traded on positions with a short-term outlook in order to maximise their effectiveness and reduce the costs of funding leveraged positions, according to trading resource and broker comparison site IndependentInvestor.co.uk.


Online CFD brokers (http://www.independentinvestor.co.uk/cfd/compare.php) comparison site IndependentInvestor.co.uk has advised traders to consider contracts for difference as a short-term investment instrument, in order to put the instruments to best effect and save on the costs of financing rolling leverage.



Highly leveraged as a rule, CFDs can provide traders with an amplified exposure to their chosen position, but are best used sparingly on short-term positions to minimise market risk while maximising short term trading profits. With financing charged on leverage on a daily basis, CFDs are best used over one day to avoid incurring financing charges, or kept for as few days as feasible to deliver a satisfactory return.


A spokesperson for IndependentInvestor.co.uk said that while CFDs (http://www.independentinvestor.co.uk/cfd/) can in some circumstances be made to work over the longer term, they are best put to use in short-term trading scenarios, maximising profits and minimising the risks of market exposure.



"Contracts for difference can be a fantastic tool for really ramping up the gains from a transaction, and they can often deliver many multiples the returns available on the same transactions in cash markets. That said, they can be expensive and risky instruments to trade, so to treat them in the same way as shares or other longer-term investments would be na‹ve. CFDs are put to best use over the shorter term, where they can be used to maximise profitable rallies but sold off before their financing charges become a cause for concern."


"Depending on the broker you trade with, your financing costs will be more or less considerable, but in most scenarios it pays dividends to minimise the amount of time your leveraged position is being funded. At IndependentInvestor.co.uk, we provide traders with access to trading guides and strategies for CFDs which highlight that while on occasion longer term positions can be sustainable, short-term trading is the preferred mechanism for CFDs."



ABOUT:

IndependentInvestor.co.uk is one of the web's leading authorities on CFD trading and financial investment, home to comprehensive guides and tutorials for new traders across a range of instruments and trading styles. For traders looking to choose a broker, its independent broker reviews make deciding on where to trade CFDs a more straightforward dilemma.



CONTACT:

Website: http://www.independentinvestor.co.uk/cfd/

Phone: 0798 881 9825

Email: marketing@independentinvestor.co.uk