This is a gem... very well explained.

And it resonates with what I know about CFDs. It's pure educational value and a bonus for all knowledge-thirsty newbies and veterans alike.

CFD must be the best thing ever invented since skimmed milk or dental floss!

I won't go a day without it...

susan66      ( Date: 03-Jun-2010 00:34) Posted: The advantage of CFD trading is mainly the timing issue, unlike playing contra, you don't need to sell off your position in 1 week's time, you can hold as long as you like but of course there is some interest charges as mentioned by the rest. You don't need to invest too much capital to buy the same quantity of shares like normal cash account. Some broking house offer up to 10 times the amount you put in but money management should be done well. It is like a margin account where they lend you money to buy/sell their share but you can choose not to use too much. However, this is not suitable for volatile markets, you need to pay extra care when it is not going towards your direction. The good thing about CFD trading is that the deposit you put in is the most that you can afford to lose if any disaster happens. I feel that if your money management is not too good, this is better than normal cash account as you won't overtrade. But if you keep topping up the margin, it's not too good either. Just take note that this amount of money you put in must be the extra cash that you have, not those you need for daily living. For me, it is a better way to control my money and cost is cheaper. purelotus      ( Date: 02-Jun-2010 22:33) Posted: Sorry that I have accidentally left out some sentences in my previous post. ------------------------------------------------------------------------  My broker advice me not to play with CFD.  His reason is most of the investor lose money in CFD trading. He said hidden thing like account adjustment for dividends, corporate action, trading suspension .etc is very dangerous. Can anyone advise me on this? What else I need to take note of in CFD trading?  Thanks in advance.

CFD account is purely for trading only.

Because your brokerage charges you a commission everyday when you hold a position, you must make sure by the end of your trade, after subtracting the commission, you still make money. Else there's no point using it.

If you can go long without having to use CFD than do that.

I would use CFD for mid-term Short only.

For those who "go long", interest is calculated daily at 5.5 percent per annum.  Investors who "short" pay either 4 or 8 percent per annum, based on the type of stocks.

I only make use of CFDs occasionally.