Hudson Thomas 
Czech investors have always been drawn to dividend-paying stocks because of the stable income and possible capital growth. These stocks provide some feeling of stability particularly in volatile markets and they are mostly companies with strong financial sheets as well as long-established. Many investors just buy and hold these shares to receive the dividend income but others are beginning to consider more active approaches to investing in the same assets. Even investors in dividend stocks are considering new opportunities in trading with such trading tools as contracts for difference.
Share CFDs are becoming popular among Czech traders who want to introduce greater flexibility in their dividend strategies. The instruments enable them to engage in speculating on the price movements of the dividend-paying stocks without having to own the shares physically. Perhaps that sounds counterintuitive at first blush, dividends are, after all, normally thought of as being related to ownership. However, CFDs reflect dividend-related events in their own special manner and when traded strategically, they present an alternate level of opportunity.
The interesting aspect of this strategy is the ability of dividend expectations to influence the price of stocks. In the period before the ex-dividend date the price can increase as traders prepare to receive the payment. Immediately after that date, the price normally readjusts to take into consideration the price being paid out. CFD traders can go around these movements and look to profit from the price changes and not the dividend itself. This involves a bit of timing and watching dividend schedules but when one has the beat, it enables one to do short term trades with a definite constrained aim.
CFDs also enable Czech investors to trade on margin, so they can achieve greater market exposure with a smaller amount of capital. This is particularly useful when trading high-priced dividend shares that otherwise would cost a lot of money to invest in directly. Although leverage is risky by itself, it can be tamed using stop-loss orders, and position sizing. To skilled traders, it is an additional instrument that brings accuracy in their approach.
Share CFDs are also capable of indicating dividend changes in a trader’s account. When a trader is long in CFD position on a stock at the time dividend is paid, then the broker might adjust the account by crediting it with a cash amount equal to the dividend. The reverse can occur with short positions. These modifications are not a substitute to the virtues of long-term dividend investing but it mimics some portion of the experience and lets one make tactical plays based on dividend events. Czech traders utilising the technique tend to be less interested in accumulating income than in finding pricing inefficiencies or temporary momentum related to dividend activity.
The strategy is especially suitable for those traders who are already tracking Czech dividend stocks. It could be utilities, banks or large industrial concerns with a history of frequent dividend payments; whatever the case, these symbols frequently find buyers before the dividend season. With CFDs, traders are able to trade around these stocks without necessarily having the desire to own the shares. That is the flexibility. It allows them to respond promptly, grab profits on shorter timeframes and change their exposure without having to wait for settlement periods.
With the further development of the Czech trading community, an increasing number of investors are combining old concepts of investment with new tools. Share CFDs fill the gap between a passive approach to dividends and active trading in the markets. With a little knowledge of how the movements on dividends impact the prices, and how CFDs follow suit, traders are inventing newer ways to remain involved with the old favorites, only with a new set of rules.