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CFDs Made Simple: A straightforward guide to contracts for difference by Peter Temple

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7. Timing Your Trades

When you are trading in CFDs, you will need to make a judgement about the likely price movement of the underlying share or index on which they are based. Though CFDs, unlike futures and spread bets, have no time limit involved, the interest element on a long CFD means that you can’t really think of it as an investment you make indefinitely, if the expected move that gave rise to the trade doesn’t materialise.

I’m labouring this point because it does mean that you need to have a reasonably precise idea about the potential magnitude of future rises and falls in the price of the shares or other security underlying the CFD, and the speed with which these changes might happen. The only way to determine this with any degree ...

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