- 9 July 2004
- Reaction score
As a fellow pedagogue, I know you would be interested to know that one doesn't have to use full leverage with CFD's. There is no reason one couldn't use CFDs for fundamental trading.Trading a stock with CFDs based on fundamental analysis is going to be tough. Short-term moves are not based on Fundamentals, the market moves on sentiment in the short term. 3% margin trading on fundamentals is crazy. 3% move in BHP can be one days move, the fundamentals have not changed in one day while you have lost all of your margin!!!!! There is nothing wrong with Fundamental analysis but you have no wriggle room with CFDs.
It is a similar principle to investors in commodity futures. The margin is a small percentage of the face value, but you can still invest unleveraged. Simply have a cash reserve equal to the face value of the contract or CFD in either a CMA or brokers account.
It's not what I would do (and I don't like CFDs either), but it could be managed that way.