Ok I have been learning about CFDs of late and understand the basic principle:
CFDs are an agreement between you and a broker to exchange, at the closing of the contract, the difference between the opening and closing prices, multiplied by the number of shares in the contract.
I also understand the difference between Direct Mark Access brokers and Market Makers.
So before I start trading CFDs I have been doing paper based trading using the live ASX prices like a DMA CFD provider would offer.
So far I have found it very easy to predict the direction of stocks. This may be because the market is very one directional of late.
So the question I ask is what is the catch. I understand the potential risk is high for CFDs and this is why the potential for profit is so high but what I don't understand is where all the profits are coming from.
Can anyone help answer this question for me?