trading in CFDs26 Jan 2006 17:54
CFDs - This is really like dealing in futures, except that they are open-dated. The good news is that they are geared insofar as you only need to put up between 5% for blue chips and 20/50% for more spivvy stocks. For example, 12500 Barclays @ £6.00 (£75k of stock) requires a deposit of only £3500, whereas 250k of ULT (£4500) requires a deposit of £2375.
Obviously, without care, while you can make a lot of money, you could lose your shirt. Fortuantely, you can protect your position by putting in stops (against falls).
In some ways, the safest sort of bet is on an index - say FTSE - where you can "bet" perhaps a minimum of £5 per point .... I knwo for sure, the minimum on Nikkei is $1.00 (some stocks or indices are quoted in $ rather than £) ...... Of course, if you think the stock/index is going to fall, you can "go short", which is much harder to do with "real shares" through a stockbroker.
However, in the first instance, you will have to be accepted as a client by the "broker" - e.g. IG Index. To do this, they will send you a form to fill in, which as much as anything else will ask you about personal wealth so they can determine what limits to allow.
I hope the above makes sense and helps, but please feel free to ask further if you want