Understanding Bull And Bear Markets

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Understanding Bull And Bear Markets

Contracts for Difference (CFDs) are derivative instruments that allow traders to speculate on the changing values of an asset without taking ownership of that asset. Due to their complexity, trading CFDs carries a high level of risk, particularly for first-time traders or investors who are not well-educated about the markets. It takes a smart businessperson to understand the risks involved in their trade and trading CFD is no different. There are risks yes, but there are rewards too. Thus, if the rewards are more than the risks, then you know you will not let an opportunity to make money pass you by. No way.

CFDs allow you to hedge an existing shares portfolio by selling short individual shares or leading indices and sector indices but not selling your shares. For instance, investors can make use of a CFD to hedge an existing long physical position in a share by taking advantage of any short term price declines while protecting the portfolio from short-term price drops.

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