Angela Merkel’s decision to ban short selling has provoked very different reactions. Do you suppose this as a solution to the crisis?

The trading CFD (Contracts for Difference) Stock has some advantages over traditional operations. By buying shares of a company using a traditional supplier, the investor has literally a percentage of that company and receives the corresponding dividends.

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Shares short

In the trading Traditional shares if the investor expects the price of a company’s stock falls, a way to make profits would go short in these actions But this process is generally seen by the traders as going against the nature of the market.

The shares are sold through a traditional supplier, the process can seem complex. And is that supposed to borrow a certain number of shares a shareholder in a company, sell and then buy them back at a lower price, thus generating a profit. Investments in naked short what happens is that the investor sells borrowed shares without having yet.

Economic uncertainty encourages the open positions

The practice of going naked short becomes especially common in times of economic uncertainty such as that Europe is going through today. Hence many countries take a decision to prohibit this practice, the latter has been the German Chancellor Angela Merkel, who has banned this type of operation to prevent the fall of market German financial.

Apart from mounted stir Union and talk of expanding this measure to other European countries, France, Switzerland and the Netherlands have already denied that Merkel will follow in this prohibition. Meanwhile, analysts and investors already say that the measure of Germany is not the real solution to the problem and yet has been a lack of coordination between European governments over because other nations were surprised by the news, like the investors.

The CFD can give higher losses at the initial contribution

But there is still a way to go in short: the trading CFD. When trading CFDs on shares or any financial instrument, as no action has physically or asset in question, is the investor who decides if you think that the trend of the asset is bullish or bearish on the market. The process to follow is simple, you ‘buy’ when it is believed that the asset price will rise in the market and ‘sell’ as is believed to decrease. It is also important to remember that trading CFD can give losses that can exceed the initial contribution so before are advised to operate fully understand the risk involved.