Warren Buffet once famously observed: “You need to know very well when to move away, or give up the loss, and not allow the anxiety to trick you into trying again.”
“I think Buffet’s advice about selecting good quality companies and staying with them for the long haul is sound advice – that’s what investing is all about. But there are times when short-term exposure to the market is warranted, for example if you are long the market and are nervous about a possible short-term correction.”
Any type of leverage carries elevated risk. Profits and losses are amplified, and inexperienced traders often commit too much capital to a single trade, and don’t really have a trading plan. They fail to exit a trade when it goes against them and can quickly blow their accounts. More experienced traders have a plan, stick to it, and exit a trade quickly when it goes bad, says Murison.
Another reason to look at CFDs is to profit from short-term opportunities that may not exist in the SA equities space, such as an expected bounce in the Nasdaq index, or the S&P 500.
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