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Monday, April 27, 2015

Newsletter: Techical analysis

CFD Trading - Weighing the advantages and risks

By Kumarpal Shah

A CFD (contract for difference) is a contract entered into between a buyer and a seller. These agreements allow buyers to purchase an asset at the price difference between the asset's current value and its value at the time it was placed on the market. CFDs are popular among financial investors because they allow traders to take advantage of profits in various markets without actually owning the assets being bought and sold. CFDs are quick, accessible, and easy to share; they can also prove to be profitable in times of a declining market because their ability to be traded for long or short positions. 

The Pros of CFD Trading 

Why trade CFDs? There are many reasons. As stated above, CFD trading does not require the individual managing the trades to actually own the assent being sold or purchased. This is a huge positive for many people because it doesn't require them to invest large sums of money in multiple physical properties simply to profit off of general market sales. 

CFDs are also traded on margin, which allows traders the opportunity to enhance the capacity of their investments, and experiment in other booming markets. The minimum amount required to be paid up front by the trader is 5% of the CFD, a minuscule amount when compare to traditional share margins. Because of this fact, CFDs are also affordable for the first-time trader. CFDs are able to be sold long or short. Long position selling allows traders to hold the asset in hopes of it increasing in value over time, while short position selling allows traders to sell the assent immediately in order to profit prior to a drastic decline in the market. It is this versatility in long or short position trading that makes CFDs potentially lucrative for many traders. 

 The Risks of CFD Trading 

As with any financial investment, choosing to trade CFDs can come with a wide variety of risks. Despite the smaller margin, the risk factor of contract for difference trades is just as high as a traditional face value stock purchase. This means the trader's CFD investment is more likely to fluctuate than a standard share purchase is. Also because of this reason, CFD trades hold the risk of the trader losing more than the 5% they initially invested. The amount of these losses can reach or exceed triple of the investors initial investment. Finally, because CFDs are derivative assets based on the trader's assumption of the market's increasing or decreasing value, there is always a potent market risk that plagues any CFD trader. Small fluctuations in the industry's profitability are capable of having a major impact of the profitability of the trader's position. 

Despite these risks, CFDs can be secured by implementing limit orders or stop losses to avoid holding onto the agreement past it's time of profitability. CFD trading can be a highly lucrative investment if the risks are thoroughly studied and respected. Understanding that managing current CFDs rather than continuing to accumulate more contracts is a better time investment is a must for those seriously considering trading CFDs. 

About the author: This guest post was written by Kumarpal Shah. He is a financial investor and copywriter. He shares his knowledge with investors to help them.

Image: Pixabay, US-PD

Monday, April 20, 2015

How do I know if I'm a victim of fraud?

Read your financial statements

Banks and credit card providers will usually send their customers a detailed statement of financial activity once per month, covering payments and credits made within the past 4 weeks. Financial institutions that offer online banking or account management make it even easier for customers to view their financial history whenever they want, from anywhere with internet access. Despite this, as a nation we’re embarrassingly bad at keeping track of our balances.

A shocking 20 percent of us fail to check financial statements when they land on the doormat each month, and an estimated 80 percent are unable to accurately estimate their current balance to a figure within a £50 range. Any fraudulent activity made via a current account, savings account, or a credit or debit card will show on a monthly statement, so it’s vital to keep track of incomings and outgoings to ensure you know when something looks out of place.

Set up misuse alerts

If you use a credit card from a well respected bank, you may have noticed that you’ve been contacted by their fraud team in the past as a transaction had been flagged as being potentially fraudulent. Banks are often good at protecting their customers, but there are times when they fail in their responsibilities, and Sainsburys hit the headlines recently for approving an unusual £9000 transaction on a customer card that was the result of fraudulent activity.

It’s important not to rely on banks solely to protect your finances. Instead, take things into your own hands. Identity protection services allow users to set up misuse alerts, which sends an email or text message to the account holder should a questionable transaction - or a credit application - be made. This process is much more thorough, and allows users to quickly log in to their online account to see details of the transaction and take appropriate action.

Check your credit rating

If you apply for credit and are refused based on a poor credit history, despite always having kept up with past payments, you may have been the target of fraudsters. Any junk mail that you toss in the bin can be picked up by criminals, and if this mail contains personal details including name and address, it’s actually very easy for fraudsters to apply for credit in your name. So easy, in fact, that it’s estimated that 40 percent of us have been refused credit after falling prey to thieves.

You have a legal right to access your credit information, but keep in mind there can be a nominal fee for doing so. In spite of this, it’s important to check your credit rating regularly to ensure there are no unfair defaults on your file, which could affect your score. Experts recommend checking your credit rating once per year, but there are no penalties for checking more frequently, and this won’t show up in reports to potential lenders.

About the author: Harry Price is a full time writer and artist living in a small coastal village on the south coast.   He loves marathon running and his 3 dogs are the best training buddies ever!

Images: 1. Geralt/Pixabay; US-PD; 2. Author owned and licensed

Monday, April 13, 2015

Newsletter: Fundamental investment analysis