Q. "I'm really stumped on this one. In February 2021, I made a promise to start real trading, after I saw Red Hot Storm Trader make positive returns year after year.
I decided to start out with a R1,000 portfolio, to test out a real account.
And last week, I took my first trade and bought 1 Aspen CFD, thanks to Timon's last RHT trade idea.
Now I'm old but I understand that the share... ››› more
CFDs, or contracts for difference, are a type of trading instrument. You can trade a wide array of underlying assets, including shares and currencies.
So how do contracts for difference work?
Let's take a closer look…
You trade on margin with CFDs
Like with other financial derivatives, you trade on margin with CFDs. This means you put down a small portion of your overall exposure ... ››› more
One of the reasons that traders choose contracts for difference (CFDs) is the gearing aspect they offer.
Gearing amplifies the movement of the underlying share price. This can work for you by multiplying your potential profits, but against you too as it also multiplies your losses.
Gearing comes from trading on margin.
Read on to find out how this work…
The impact of trading CFDs ... ››› more
If you invest in a share, if its price rises R5, you're R5 better off.
Yet thanks to gearing when you trade contracts for difference (CFDs), the same share price move could leave you R50 better off.
So how does gearing work when you trade CFDs?
Let's take a closer look…
What is gearing?
CFDs, like other derivative products, are geared. In other words, there are money multiplie... ››› more
On the 28th March 2014 I told my Red Hot Storm Traders to buy (go long) FirstRand using Single Stock Futures or CFDs.
In less than two weeks, the FirstRand share price rose 6.3%, hit its take profit level and my traders banked a 70% gain in less than two weeks.
I agree it sounds ludicrous to make 70% off a 6.3% share price move, but after you read how they banked 70%, you'll see that I'm no... ››› more
Over the last few years, CFDs have become increasingly popular in South Africa. In fact, “it's thought that in the near future, they'll kick single stock futures off the top spot and become the most popular trading product in South Africa,” says the Ultimate Contracts for Difference Guide. But, if you're taking advantage of what CFDs have to offer, it's crucial you manage the downside risks al... ››› more
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