Transparent Alternative

The financial crisis has not only led to a rising risk aversion of investors, which investors are also skeptical over intransparent investment products have become. And for good reason. Banks have been in investment funds and structured certificates earned much money, because investors had no chance, products and fee structure to imply. Safe winners were always the banks, while customers and benefited from the products, provided that the hidden costs are not devoured the entire income, or the issuer is not pleiteging.

The distrust of funds and certificates has helped many investors transparent and cost effective products are looking for. Thus, traditional forms of investment such as shares and bonds back into the foreground. For the investors are to understand the risks and costs transparent. The only drawback is that the equity markets are currently not a big upside potential.

For Contracts for Difference (CFD) plays the direction of the stock market, however, does not matter. Depending on whether you buy or sell CFDs can to rising or falling prices of equities, indices and commodities set. Through a combination of purchases and sales, it is also possible on developments relative to speculate, for example, whether one shares rise more than another or than the index.

CFDs are transparent
CFDs also offer as a hedging instrument for a traditional portfolio. In the current crisis will certainly have many wished that they sold their shares with CFDs Dax had hedged. Whether CFDs as speculative or as hedging instruments, the investor decides alone.

Above all, the CFD but transparent, risk and costs. The instrument also contributes to a more efficient pricing in the stock market because of the CFD smaller investors a wider market opening. The active stock trading is no longer reserved for large investors, but by means of CFD can also be combined with a low large equity positions to be moved.

What to watch when you are CFDs? CFDs are not securities, but the difference contracts. The buyer gets his winnings when the price rises, and must pay when the price falls, sales situation is exactly reversed. Since the investor has a margin deposit to an account, pay the bank or broker does not pose a risk if the customer fails. Conversely, however, this remains the risk of the customer if the bank fails. The investor should take care that the creditworthiness of the bank or broker in order.

A bilateral agreement between customer and bank
It is also important that the liquidity of the respective CFD true. Unlike shares may not CFDs to another bank and they are sold. The CFD is a bilateral contract between the bank and the customer and the customer is therefore also rely on the CFD at the bank, where the position was opened, close. Before you opt for a bank or a broker decides must therefore try to ensure that prices are close, for sizes amount that one intends to act.