Is CFD a viable option for long-term trading?

Something really does seem seedy that if I invest $2500, that I'll make above 50k if the stock doubles. Is it really that easy?

You only buy or sell on margin. Think of when the stock moves in the opposite direction. You will loose 50k. You probably didn't look into that. Investment will vanish and then you will have debt to repay.

Holding for long term in CFD accounts are charged per day. Charges depends on different service providers.

CFD isn't and should not be used for long term. It is primarily for trading in the short term, maybe a week at the maximum.

Have a look at the wikipedia entry and educate yourself.

No, CFD is not viable as a long term trading strategy.

You have a minimum margin to maintain, and you are given X days to top up your margin should you not meet the margin requirements. Failure to meet margin requirements will result in a forced sell where you are no longer able to hold onto the stock.

A long term trading strategy is where you hold onto the stock through the bad times of the company and keep it long enough to see the good times. However, with CFD, you may be forced to sell before you see the good times. In addition, you incur additional lending charges (e.g. 4%-6%) for the ability to leverage.

it is pretty much the same as a normal margin loan but cheaper because you don't own the underlying share.the if the margin is $1000 at 5% you could borrow $20000 in total so the actual amount would be $19000 in total that you would have to pay interest on so at the moment it is 5.1% which is $19000x5.1% /365 days =$2.66 a day and if the share price rises you don't pay extra in interest costs unless you have borrowed more.it still stays at 2.66 a day until you have sold the shares

Yes it is viable as long term!!

BUT...

1. Invest in something with low financing cost, low margin requirement and low volatility!! CFD index investment like Nasdaq-100 or S&P-500 come to mind.
2. Make sure you only give yourself a good buffer for a downdraft. Basically a buffer for a 10% fall is good. 20% is better!!!
3. Do a trailing stop. IF the broker does not support server-side trailing stop, forget it!!

The average yearly return for the Nasdaq-100 for the last 20 years is 15%!! If you subtract the financing cost for the CFD (my broker is 4%) it gives you about 11%. You can add 1% dividend yield to that. That's 12% return!! As you earn more you can compound in more contracts. Make sure you keep your buffer. Soon enough you can have a very large exposure.

The market right now is in euphoria. But a Trump impeachment can be very dangerous thing..

Happy investing!!

Yes it is viable but uncommon. As with everything to do with investment, you have to know what you are doing and must have a plan.

I have been successful with long term trading of CFDs for several years. It is true that the cost of financing to hold positions long term cuts into profits but so do the spreads and comissions when you trade frequently. You need to use the benefits of CFDs to your advantage: variety of instruments, being able to hold long or short positions and leverage.

What I have found works is a portfolio that is has overall low volatility even if its components are significantly leveraged and/or volatile. I backtest portfolios with my main focus being the maximum drawdown I can safely accept. Provided you can generate a return on your investment that exceeds the financing cost and can manage drawdowns without a margin call, there's no reason this can't work for you.

There are additional advantages of this strategy from a tax perspective. In my case, holding CFD contracts long term are unrealised capital gains so they aren't taxed. However, the financing costs are realised losses so are tax deductable. Of course it may be different in your jurisdiction so check with a tax accountant.