How the IC can be used to trade CFD's

Because all Investor's Coach Portfolios and Individual Stocks are tradable with CFD’s, as well as with standard stock trading methods, investors have the possibility to trade with CFD’s easily (for both long and short) – further increasing profits and benefiting from a leverage factor.

What are CFD’s?

CFD stands for "Contract for Difference" and are traded over the counter (OTC). CFD’s allow an investor to buy stocks with a leverage factor, in both long and short positions. Leverage is usually at a factor of 10 but in some cases could be as high as 100. This means that an investment of 10,000 Euros would be equivalent to 100,000 Euros if there was a leverage factor of 10. Unlike future contract CFD’s have no fixed expiry dates or contract sizes, but are traded on margins.

They work in much the same way as normal stock trading except for a few key differences. Investors need to pay interest on a daily basis. However these rates vary between different brokerages and individual trading programs. Your broker will be able to advise you on these charges.

CFD's are bought for as little as 10% their value and unlike shares no rights or obligations are acquired. It is therefore possible to hold a position 10 times greater then would be normally possible resulting in much greater profits, if the investments prove successful, but this also means that losses would be much more damaging too. Not only is it possible to lose all the money invested but investors may be liable to pay additional funds to maintain the required margin requirements.

The use of CFD’s first came about in London in the early 1990’s and now CFD’s are available for stocks or shares of companies in the FTSE 350, DAX, ATX along with most major continental European companies.

How can the Investor’s Coach be used for CFD Trading?

Registered users will receive email notifications for their selected Reference Portfolios and Individual Stocks directly from the IC. These recommendations can be used to trade normal stocks or CFD’s since all stocks that the IC analyses’ are tradable by CFD’s. Trading with CFD’s carry higher risk but with the invaluable resources and expertise of the IC it is possible to make substantial profits.

Subscribers can simply follow any of the Investor’s Coach Reference Portfolios exactly but instead of trading with normal means, users should trade with CFD’s – benefiting from the leverage factor. In addition users can also trade CFD’s using the Individual Stock Recommendations and can build their own portfolios while continuously receiving comprehensive, detailed recommendations.

What are the Benefits of CFD trading?

CFD trading has grown in popularity over recent years and proves a valuable method for stock trading without the need to purchase shares out right. CFD’s are tradable by margins and are recommended to investors for higher risk investments. Trading with CFD’s can be done by anyone and with the help of the Investor's Coach you receive reliable trading tips to decide which shares to buy or sell because the IC does all the analysis work for you.

This means you could trade a whole

Investor's Coach Reference Portfolio with CFD’s increasing your profits by up to 10 times. CFD’s are also an advantage for investors with less capital. If for example you are investing 10,000 and choose to follow a Reference Portfolio, you could trade with CFD’s with a leverage factor of 10 and increase to exposure to 100,000. CFD’s can boost your profits – from 91% to 910% when a leverage factor of 10 is applied. Some CFD’s offer much higher leverage factors of up too 100, which would theoretically lead to a profit of 9100%.

What Risks are Associated with CFD Trading?

Be aware that the risk of loosing money is increased when using a higher leverage factor. You should always calculate using the max drawdown for each portfolio to estimate your risk (max drawdown indicated in table on right hand side of all Reference Portfolio pages). When trading in this way you must be prepared for higher losses. Professionals therefore have recommended not to trade more than 25% of you free available cash in CFD’s.

In the example shown below, a 14% drawdown turns into a total loss with a leverage factor of just 7. In this case the trader would have lost all the invested money. But with a lower factor (6) the investment would have been able to recover. It is important to trade wisely and be extra cautious when using higher leverage factors to avoid loosing all you investment.