Contractual Trading

Contractual Trading. What is contra trading? To cut it short, it is a more advanced and cash strapped individuals to carry out. Basically you borrow some money from the company broker to invest in shares.

For example, if you deposited $3000, you will receive an amount of $9000 for instance to trade in the share market. So, the balance $6000 is not deposited buy you, its just a trading limit But you still can use the money to invest in shares. Either way, you need to repay or top-up more money if you have some lost.

I am pretty sure some of you are lost.

Here is some calculation that might help :

Deposited $3000 = Trading Limit $ 9000

Scenario A :
$9000 used to buy shares. Made 30% which brings to an amount of $2700.
So the profit will be yours. But your balance would be $5700. Instead of $11700. Because you deposited only $3000.

Scenario B :
$9000 used to buy shares. Loss 30% which brings to an amount of -$2700.
You will need to repay the "contra loss" that you made.


Its the other way round. It sounds good for Scenario A and bad for Scenario B. Happy Trading.