CFD Trading Quiz: Test Your Knowledge

1. What does CFD stand for?

   Capital Fund Derivative
   Contract for Difference
   Collateralised Futures Deal

2. Can you go short with CFDs?

   No, only long positions are allowed
   Yes, you can profit from falling prices
   Only if you’re using leverage

3. What is a margin?

   A fixed fee for opening a CFD trade
   The deposit required to open a leveraged trade
   Your total investment amount

4. What is leverage used for?

   To control a larger position with less capital
   To reduce risk in trading
   To avoid using stop-losses

5. How is profit calculated in a CFD trade?

   Difference between entry and exit price, multiplied by position size
   Total margin used divided by spread
   Annualised return on capital employed

6. Name one cost associated with CFD trading.

   VAT
   Overnight financing
   Stamp duty

7. What happens if the market moves against your position?

   Your broker pays the loss
   You could lose more than your deposit
   You automatically earn a rebate

8. What is the spread?

   The amount of leverage available
   The difference between the buy and sell price
   A market crash caused by panic selling

9. Are CFDs suitable for long-term investing?

   No, they are better for short-term trading
   Yes, because they provide dividends
   Only if held over a weekend

10. Why is risk management important in CFD trading?

    To limit potential losses from volatility
    To guarantee profits
    To avoid taxes on gains

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