Although many investors feel they only need to understand their one area of the market, it is imperative they learn all the finer areas and different methods and types of their particular instrument to offer them more choices for success.
Online PR News – 02-June-2011 – – It is one thing trading in a particular financial instrument and quite another knowing everything about it. Very often, traders are not fully aware of all details of the instrument they are trading in and that can prove a costly lapse especially when it comes to derivatives. Indepententinvestor.co.uk, one of the reputed and well known CFD investment resources and in the business for a long time says that they are constantly trying to educate their customers and others interested in CFD Trading about the product and other finer nuances about it.
IndependentInvestor.co.uk spokesperson says that ,'We understand that traders are generally more concerned about their own specific area of interest and would not like to go beyond it but we feel that it is essential for CFD traders for instance to know about the various types of CFD contracts that exist and how they can benefit from them. It is always better to be aware of the options available.'
He adds, 'Listed, Unlisted and those that are exchange-traded comprise the three different types of CFDs. In the case of listed CFDs, the costs related to the financing as well as margins along with even the dividends are already inbuilt into the contract. Moreover, the bid-offer placed by the CFD provider in terms of its spread would be constant the entire day so that transactions can take place at that spread. The commissions on these listed CFDs too are only paid on the margin amount and not on the entire amount. The one advantage is that the trader would not get any margin calls and the position taken by him would stay till he closes it.'
'Unlisted CFDs are transactions between the trader and the broker and since a majority of the contracts are of the unlisted variety, the traders are dependent on the brokers to close positions. This also means that the cost of financing the position is deducted or paid on a daily basis depending on the position taken by the trader. Moreover, the trader may have to make additional margin payments should his position becomes a loss making one,' explains the spokesperson.
'Lastly there is the exchange-traded CFDs, follows the classic model of a central clearing entity that regulates market positions in acting as a buyer or seller and as is done in the physical cash market and futures contracts. There is better transparency and credibility as well as standardization of contracts in this case,' confirms the spokesperson.
About Independent Investor
A leading investing source of information, emphasizing delivering high quality information and facts guides, tutorials, and everything an investor needs to become a successful trader in the UK investment market. IndependentInvestor.co.uk facilitates a unique perspective of the investment industry, from picking out a broker through to implementing sophisticated trading systems.
Phone: 0798 881 9825
Country: United Kingdom