CFD's are financial derivative products that allow you to trade on the price movements of securities and indices without ever owning the underlying asset. Trading CFD’s has the scope to maximize your market participation for only a fraction of the investment you would need to buy or sell the underlying asset directly through the use of leverage. Trade with a leverage of up to 1:100 and capitalize on your trading opportunities.
By trading Commodity CFD's with Al-Shuaib you are able to profit by using the low margin requirements and access a wide range of products with competitive spreads.
Efficiently utilize your capital by putting up only a small percentage of the total investment value by using leverage. To start with, trading on a CFD you need to deposit only a fraction of the total trade value. Leverage can be helpful if the market moves in the direction that you are expecting it to be but it carries a high amount of potential risk if the market moves against your favor.
The market is volatile. It may go up or down. When you trade CFD’s you can potentially profit from rising or falling markets because you are not owning the financial instrument; instead you are trading based on the price movement of the same. This makes it easy to sell a CFD like buying it.
While trading in a bull market a trader would look to buy a CFD position first and then sell at a later date to end their position. This is known as ‘going long’.
Again while trading in the bear market a trader would want to sell a CFD position before buying it back again at a later date to liquidate their position. This is known as ‘going short’ in trading.
CFD’s present traders an opportunity to trade in a variety of markets and in a range of instruments that would not be otherwise available to investors. The ability to trade across varied markets helps traders diversify their trading portfolio.
Implementation of hedged positions can help investors cut down the potential risk. To cite an example if you have a long position that is incurring loss you can open a position in the opposite direction using a short CFD. This will help to even out losses, as the short position will start to make gains if prices continue in a downward direction. Hence ‘hedging’ can allow you to limit risk and prevent future losses
Contracts For Difference or CFD’s are derivative instruments whereby investors can speculate or hedge on any movements in their investments without the onus of physical ownership. Thus they can easily diversify their portfolio and the use of leverage allows them to hold onto positions much greater in worth than the value of their actual trading accounts. Due to the lack of ownership they enjoy the advantage of not having to pay any account management fees, or commission charges, and, in some countries even the stamp duty. A trader's share in a CFD trade is calculated by the variance between the rate at which they buy it and the rate at which they sell it, plus or minus interest credits or debits.
Hedging is used to cut down potential risk of losses via short-selling, future contracts, call options or put options. A hedge can help lock in gains and lessen the volatility of a trading portfolio.
It’s important to recognize the potential downside of CFD trading too as it can be a two-edged sword.