Low asked 6 years ago
Hi Peter,
I would like to learn more on how to use CFD and it’s calculation. Can you share more on how we should use CFD in our share investment?
Thanks.
Peter Lim Staff answered 6 years ago
CFD is generally buying stocks with leveraged money.
Say you buy a $100k stock with $20k of capital. The broker will charge you interest on the entire amount of your purchase ($100k), eventhough $20k is your own money.
More details are here: https://www.interactivebrokers.com/en/index.php?f=1170
Leverage magnifies returns (both the upside, as well as its downside). Its like driving a ferrari with powerful jet rocket turbo at its side. It could be very dangerous if your driving skill is not at a very good level.
I would suggest using CFD / Margin after you’re very good in stock valuations, and not before.
Remember, the fastest thing about money, is losing it.