Operational CFDs

The operational through CFDs (contracts for difference) derivatives have become already usual between Spanish portfolios. These products offer the leverage as a double-edged weapon, i.e. on the one hand the leverage effect allows the inverter open position on a large amount of assets through a relatively small deposit. This means that investors can have a payout of 20 times the initial amount that contributed to open position. The other side of leverage is the risk involved since it is something that can be very beneficial once the trend is on their side, but there is always the possibility that the market again against its forecasts. In this case losses can also exceed 20 times the initial margin. That is why it is important to understand the risks posed by the operations with CFDs before beginning your strategy. Let’s see what are the options for managing this risk.

How to control losses put a stop on its operational is very important due to the nature of CFDs and a the volatility of the markets. Why there are different types of tools to manage the risk as orders limits, orders stops or the guaranteed stops. Before you begin your trading you can calculate what is the maximum amount you are willing to lose in the worst cases and in that line, in that limit, you imposed your stop when the market rubs against that limit, to close his position. Guaranteed stops fulfill its mission even when the market experienced slippage (a sudden rapid movement). It has a monitoring constant position maintain continuous follow-up on their operations is essential.

It is your responsibility to be aware of its position, although your CFD provider will also warn you about the movements of the markets and in its operational possibilities. Today, with the development of new technologies, keep track of your investment is to everyone thanks to trading platforms tailored to the mobile phone, that most providers offer currently. Don’t forget that there are other resources such as training seminars on CFDs that some providers offer online or face-to-face. In the training courses they will teach you the appropriate for each investment risk control strategy. One of the main providers of CFDs in Spain is IG Markets. The analysts in the market of this company are free courses of trading of CFDs where treated in these operational risk control tools. Learn about CFDs and the possibilities of controlling this type of trading losses. The above comments do not constitute investment advice and therefore IG Markets does not accept any responsibility for any use that can be made of them. CFDs are a leveraged product that entail a high level of risk and may result in losses that exceed your initial deposit. Make sure that you understand fully the risks involved and perform a constant monitoring of your investment.

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