Contracts for difference (CFDs) are great trading products, but they do carry risks that differ from ordinary share investments. Thankfully there are many great strategies to manage risk in a CFD portfolio. As we explained in this video, CFDs are great tools for hedging. Unlike ordinary share investments, you can lose more money than you start out with when you trade CFDs. The margin you are required to deposit is less than the exposure. When things go wrong, you could be placed into margin call. In this video, Simon Brown helps you understand the risks involved in CFD trading. He also discusses counter-party risk and how that should affect your CFD trading choices.
A well thought-out trading plan is an important tool when managing risk in a CFD portfolio. Watch this video to learn how to put together a trading plan.
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