Ask Colin

Are Contracts for Difference suitable for a new trader with limited capital?

No. In fact I don't think they will accept you as a client if you are a new trader. They want you to have had some experience.

You should be able to make money trading in shares before you start using derivatives, because they involve greater risk in the form of borowing and leverage.

Short selling has some attractions because brokers make it so difficult in Australia. However, short selling is more difficult than buying to go long and I prefer people to first have a track record of success on the long side first.

Most people who read this will probably ignore my advice. However, one thing they should not ignore is that they should understand the trading platform for CFDs before putting real money on it. There are many traps for the unaware and I have already heard of some tears where people started using the system and lost money because they did not understand it. I believe that Deal for Free have a facility where you can trial the system and become familiar with it before you start trading. This is very responsible of them. Use it to test run all of your trading methods and make sure you understand how it handles some of the tricky things.

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