It is generally believed that CFDs are suitable only for those with a very short time horizons or day traders. One of the reasons given for that is that you pay interest if you carry the position overnight. The longer the period you keep the position open with the CFD Singapore broker the higher the interest amount.
It is commonsense that if you want to hold a position for long you would rather buy in the cash market where you do not have to pay a regular maintenance charge. But there is another side to it also. If you are paying hard cash for the full investment amount, you are foregoing the interest that you would otherwise get if the money were to remain in a bank deposit. You need to view the interest that you pay to CFD Singapore the same way. It is just like the way a landlord makes it worthwhile by figuring in the expense of constant maintenance of rental property into his profit calculation.
It should be kept in mind that the CFD Singapore will typically charge an interest rate that is roughly two to three points above the base rate. However, if you go short in a contract with the CFD Singapore, you are paid an interest rate that is 2-3 points lower than the base rate.
The second point to be made in favour is that CFD Singapore is a leveraged product. If have done your research properly and your instinct proves correct, you stand to get a handsome profit on the full value of the contract with an initial outlay of 10% of the contract value.
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