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2007-11-11 07:19:30 · 3 answers · asked by Partly Shady 2 in Business & Finance Investing

3 answers

options are never good for a beginner, because they have the highest risk involved.

2007-11-11 07:23:49 · answer #1 · answered by zanthus 5 · 0 0

Shares.

CFDs and options are both derivatives. They are called derivatives because they derive their value from the price of the underlying, such as shares.

You should know the factors that have an impact on the price of the shares to trade any of them, but with derivatives you also need to understand other factors that have an impact on the price of the derivatives.

Derivatives are also more complicated because they are leveraged, so a small move in the price of the underlying shares, say 10%, can change the price of some of the derivaives by several hundred percent. Consequently beginner errors can be much more expensive with derivatives.

2007-11-11 17:43:22 · answer #2 · answered by zman492 7 · 0 0

Everyone thinks they know the golden rules of CFD trading, but still most novice traders make so many mistakes that only a few go on to successful trading careers. More traders wipe out their trading accounts because of not following this rule than probably any other reason. Clinging to a losing trade and cashing in on a profitable trade too early will result in a series of small wins and a small number of catastrophic losses. A trader who bases his or her trading decisions on a so-called ‘gut feel’ might make the occasional big win, but in real life he or she will very seldom become consistently profitable. This is why having trading rules and sticking to them at all costs are so important.

2014-08-27 21:18:35 · answer #3 · answered by ? 3 · 6 0

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