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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. 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
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