As if there isn't already enough mystique surrounding the investment world, with analysts and dealers being unable to pinpoint the exact reasons for the recent turbulence in the Irish market and pointing simply to the macroeconomic outlook, anyone reading the paper last week would have been faced with yet another little-known acronym.
CFDs, or Contracts For Difference, have been blamed in part for the Irish market's consistent outperformance on the downside in recent weeks.
While CFDs are used in most equity markets, they are reported to account for more than a third of equity business conducted on the Irish Stock Exchange and as a result have a significant impact on the overall market here.
When things are going well this isn't a problem, but when things are heading downwards, the precarious nature of CFD trading becomes apparent and can have a knock on effect on sentiment.
A CFD allows an investor to speculate on movements in share prices without having to own the actual shares. Instead of putting up the money required to buy into a stock, investors will pay only a fraction of the face price of the deal as a deposit - most brokers require 10-20 per cent - and then bet that the shares will either rise or fall.
In market speak, the investor is either "long" (where he anticipates the underlying share price will rise) or "short" (where he bets on a fall in the price).
The nature of the trade means that any gains made are magnified because the investor receives the gain on the full value of the contract and not just the margin, or amount initially put up.
However in the same vein, losses are similarly magnified, meaning that if an investor has bet on the share price rising and it falls, he will lose not only the money they put up, but also the rest of the value of the contract too.
In this situation he will be required to lodge additional money against the contract to make up for the loss or else risk having to foot the entire bill.
While CFDs are not instruments usually used by retail investors, if you are investing in the market it is worth being aware of their existence.
When things are going well and share prices are rising there is little concern about CFD trades, but if stock prices start to fall and many investors are left nursing substantial losses, then the fragility of the overall market comes into question.
As a result, CantorFitzgerald, the biggest player in the CFD market here in Ireland, is reported to have liquidated more than €220 million held through CFDs at the end of last month, meaning that any losses held by investors are no longer recoverable.
While the Irish market has survived so far, some traders have long expressed concern that the over dependence on this type of trading would come back to haunt the market.
With the volatility continuing it seems we are not out of the woods yet, and anyone seeking to bet on prices rising may be best to bide their time.
