Good question. I've learned the hard way with CFDs and lost...

Good question. I've learned the hard way with CFDs and lost quite a few thousand dollars before learning a few hard lessons.

The big advantage for me is that you can use unrealised gains for reinvestment to top up holdings. (without having to close out your position).

I have made some huge mistakes with BTA holdings at the start in that I was buying too aggressively and did not make provisions for market falls. At one stage I had 78,000 with no free equity. BTA fell around 15c and almost wiped me. Brings me to my second point. I use stop losses, and I stopped out. As the slippage factor is minimal I just use regular stop losses ( not guaranteed stop losses ). If my holdings increase I will consider guaranteed stop losses.
Usually the rule is that I allow enough free equity for a 13% fall in the share price or around 35c so my account can manage this without going into margin call, and I trail my stops to around 40c under the current market price. What I've done now is build a spreadsheet which time tables my buying. I wait for surges and top up on the. As of late there has been not much in the way of pull back so sometimes you have to take a small punt and just buy in at market, say a small top up that your account can handle if the sp goes south. If your interested in seeing my spreadsheet email me at [email protected]. Put Portable Alpha in your subject as I get a heap of junk mail. Cheers, Nicolette