What trading strategies are commonly adopted?
Going long: – This is the simplest and most straightforward strategy. A long CFD will profit from an upward price movement in the underlying and has the benefit that no Any taxes is payable. There is no limit for the holding of a long position but, as explained below, there comes a point in time where a long CFD may become uneconomic. Going short: – Also a simple and straightforward strategy and one of the principal attractions of CFD trading. By entering into a short CFD position a profit will be seen if the price of the underlying falls. Such a position can be maintained indefinitely without the need or the associated costs of having to continually roll the position over. Additionally, short positions generate an interest income but dividends are paid gross. Hedging: – It is possible to offset an existing stock position so as to reduce market risk particularly in terms of a different time horizon to an underlying position. In other words, a trader may want to reduce exposure temporar
