CFD

Q & ACFD
Low asked 3 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.
 

1 Answers
Peter Lim Staff answered 3 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.