Wugin - here is something for you:Make market movements work for...

Wugin - here is something for you:

Make market movements work for you
CFDs are an exciting way to trade. Rather than buying and holding stock, you speculate on the price movements of an individual share or an index – take a ‘long’ position, betting the price will rise, or a ‘short’ position, betting the price will fall.
Although they present an opportunity to make significant profits, the geared nature of CFDs means that a relatively small movement in price of the underlying security will result in a much larger movement in the value in the CFD. It is possible to quickly lose more money than your initial deposit.

The cost of hedging ing CFDs
The cost of hedging is the cost of the CFD transaction and the lost profit opportunity (this is the opportunity that if the stock goes up you will lose money on your CFD trade*). Unfortunately this cannot be avoided as this is the price you pay for the insurance or protection. However, some of these costs are offset by the interest you will receive on your short CFD position. This amount will depend on the LIBOR rate and the duration of the hedge**.


"The stick has two ends'
NJ