What are your thoughts on CFD trading?

Hi all. I know CFDs is a double-edged sword duel to leveraging. But what do you think of “investing” in CFDs for the long-term, instead of (US) stocks? E.g. if I think the highly priced Apple shares will go up for the long-term, what are your opinions in investing in Apple using CFDs, as compared to stocks, specifically for the long run? My thoughts of doing this is to make my capital (or money) work harder but I’m not sure the pros and cons of doing this. Thanks all in advance.

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What are your thoughts?

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Thomas

25 Feb 2020

Hi Anon,

I suggest you to set up a demo account in IG or Philip, it can be done online fuss free and yes they are all free. The demo account gives you some fake funds for you to play around with and get to know their system. But importantly, it also lets you have a feel of whether you are proficient enough to trade using CFD.

This is because CFD trading is a very high risk affair, and if like what you mention you intend to buy and hold for long term, I will not recommend using CFD. FYI you'll be charged a fee for every day you hold onto the stocks on CFD, and these fees do add up. This is also the reason why most people who leverage tend to do intra-day trades to avoid the holding fees.

I'm no expert in this area as I only played around using their demo system, but do try out their system and see where your trading gets you.

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