This page contains a Flash digital edition of a book.
11

How CFDs can be used to fine tune your portfolio

Whilst CFD trading is not for everyone, for those who understand the risks and are comfortable investing, there are a number of advantages:

Hedging – the use of a CFD as an insurance policy to protect other investments in your portfolio, effectively insuring against price movements. For example, if you own a share that you suspect may fall in value but don’t want to sell it, you can buy a CFD short position that will gain in value as that share falls, therefore neutralising the effects.

Cash extraction – a way of getting exposure to an asset without having to stump up the whole amount. For example say you want £10,000 worth of exposure to a share. You invest £2,000 in a CFD with five times gearing. You have thereby ‘extracted’ £8,000 in cash.

To find out more

Speculation – a short-term trading strategy that takes advantage of the narrow spread between buying (offer) and selling (bid) prices and short term movements in the price of the underlying asset.

Selling short – traditional shares do not provide the flexibility to profit from all market conditions, however, if you believe the market will fall, short selling a CFD will generate potential for capital growth.

Tax advantages – because you do not take physical delivery of the financial instrument you are trading within the CFD account, you are not liable for stamp duty on the transaction.

natweststockbrokers.com/cfdtrading 0845 350 0100 Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20
Produced with Yudu - www.yudu.com