CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 59% of retail investor accounts lose money when trading CFDs with this provider (Saxo Bank). You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money.
In this module we’ll expand on the subject of margin and leverage and look more closely at the key characteristics of CFDs. We’ll also explore ‘short’ positions and how they impact profits and losses. See how a CFD trade compares to a stock trade. Understanding and managing risk is imperative. Margin is essentially ‘borrowed’ money. It gives the CFD trader the opportunity to trade on leverage. It is very important to understand that CFD trading magnifies both profits and losses. Whilst potential profits can be increased (due to the fact that the full Stocks price of the CFD position has not been funded by the trader), losses can also be higher.
The importance, benefits and risks of using leverage
How margins create leverage or gearing
How to calculate percentage profits and losses
And how to take a ‘short’ position