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Description of CFDs

CFDs, or contracts for difference, provide the investor with unparalleled trading opportunities in today's volatile markets.

CFDs are derivative products that allow you to trade on the price movements of securities and indices without ever owning the underlying asset. They offer a leveraged, flexible, cost-effective alternative to traditional trading methods. You can go long or short and hedge open positions in other tradable instruments, thereby enabling you to trade whatever the market conditions.

This book provides an essential guide to these exciting products. Structured in five parts it takes you through everything you need to know, from basic principles, mechanics and strategies, through to understanding the psychology behind your trading, including:

- What a CFD is, how it is priced, and the range of different CFDs and markets available to trade.

- The principles of CFDs and the mechanics of opening, funding and maintaining a CFD trading account, and the different types of account that are available.

- The logistics of trading CFDs, including details of tradable markets, the range of underlying instruments and popular trading strategies.

- The benefits and risks of trading CFDs, including leverage, shorting, hedging and tax.

- A comparison between CFDs and other trading instruments such as spread betting, covered warrants, options and futures.

- Controlling risk through the use of stop loss limits, trailing stops, guaranteed stops and limited liability orders.

CFDs are an essential part of the smart investor's toolbox, and this book gives you everything you need to make the most of them.

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Title Information

ISBN:

9781905641437

Pages:

192 pages

Format:

Paperback

Product Code:

173069

Publisher:

Harriman House

Published:

27/07/2009

Edition:

1st Edition

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About David James Norman

David James Norman has been involved in trading and financial markets technology for over 20 years. He has traded and overseen corporate trading operations in a variety of stock and derivatives markets, provides consultancy, seminar and coursework in the field of market technology to exchanges, global trading houses and investment banks, and has taught graduate classes in market technology for three years in Chicago.

He is the author of four books on trading and market technology: Trading at the Speed of Light (Paradym, 2001), Professional Electronic Trading (John Wiley & Sons, 2002) Trader DNA (Paradym, 2006) and The Virtual Trader (Paradym 2007). Formerly the Director of Market Technology at Illinois Institute of Technology, IIT he now works in London as a financial markets consultant for Office for Market Technology, Ltd.

Contents of CFDs

Preface

Introduction

1. The Principles of CFDs
- What is a CFD?
- Range of CFDs
- Types of CFD Provider
- How CFDs are Traded
- Characteristics of CFDs
- Comparison of CFDs with Other Instruments

2. The Mechanics of CFDs
- Money Flows of a Trade
- Equity CFDs and Corporate Actions

3. Managing a CFD Account
- Opening an Account
- Opening a CFD Trading Account
- CFD Trading Software
- Placing an Order

4. CFD Trading Strategies
- Developing a successful trading approach
- Speculative Trading Strategies
- Market-Neutral Trading Strategies
- Special Situation Trading Strategies
- Portfolio Risk Management

5. CFD Regulation
- Regulation
- MiFID and the Pan European Regulatory
- Environment for CFDs
- Short Selling Rules and CFDs
- FSA Disclosure Regime and Corporate Governance
- UCITS

6. The Future of CFDs
- What is the future for CFDs?

Appendices
- Stock exchange trading hours

Index