SVS CFD offer the opportunity to trade CFDs on an execution only, online or on your mobile, or traditional phone broking.

There are a number of popular CFD trading strategies which can be used, such as:

Hedging

CFDs are also often used to protect an investor's long-term physical share holdings against variable market conditions. If you have a stock portfolio that you believe will go down in the near future, but you do not wish to sell because you believe it is a good long term investment, you could for example short a FTSE contract thereby hedging your portfolio and earn money from its decline. This also saves on the associated costs with selling physical shares and buying them back at a later date and is considered a very popular strategy amongst active investors.

Pairs Trading

Pairs trading is a popular technique which balances a long trade versus a short trade. For example, you could buy one stock, future or other financial instrument and simultaneously sell another. By anticipating a divergence or convergence in price between two instruments, pairs trading offers traders the chance to adjust their risk tolerance to the trade.

A risk-averse pairs trade would be a same-sector pair, perhaps buying Lloyds (lloy) while selling Royal Bank of Scotland (RBS). The expectation in this example is that the price of Lloyds will rise relative to the price of RBS. By pairs trading, a trader reduces exposure to large market moves, in this case a big move in the FTSE 100. In a crash situation, both shares could be expected to fall by a similar percentage, thus exposing a CFD trader to just the convergence or divergence between the two stocks.

A trader with higher risk-tolerance levels would make a more aggressive pairs trade, perhaps trading shares from different sectors, different market caps or even different exchanges.

Tax Efficient Trading

The aim of this is for the investor to control the time by which their gains or losses are realised. The key to tax efficient trading is not just about big gains, but primarily about limiting potential losses.

It is important to understand however that the tax treatment of investments depends on the individual circumstances of each client and may be subject to change in the future. Please consult your tax advisor for further information on your specific situation.

CFD trader is a trading name of IG Markets Limited, a company registered in England and Wales no. 04008957. Registered Office: Cannon Bridge House, 25 Dowgate Hill, London, EC4R 2YA. Authorised and regulated by the Financial Conduct Authority, Firm No.195355.

SVS Securities Plc. Registered in England and Wales no. 04402606. Registered Office: 20 Ropemaker Street, London, EC2Y 9AR. Authorised and regulated by the Financial Conduct Authority, Firm No. 220929. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager.

Risk Warning: Remember that Contracts for Difference are a leveraged product and can result in losses that exceed your initial deposit. CFD trading may not be suitable for everyone, so please ensure that you fully understand the risks involved. Trading in CFDs carries a high degree of risk, and prices may change quickly and go down as well as up. Past performance will not necessarily be repeated and is no guarantee of future success. CFD contracts can only be settled in cash. Transactions in CFDs may also have a contingent liability. Contingent liability investment transactions, which are margined, require you to make a series of payments against the purchase price, instead of paying the whole purchase price immediately. You may sustain a total loss of the margin you deposit with a firm to establish or maintain a position. If the market moves against you, you may be called upon to pay substantial additional margin at short notice to maintain the position. If you fail to do so within the time required, your position may be liquidated at a loss and you will be responsible for the resulting deficit.

The information on this site is not directed at residents of the United States or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Read our Terms of Business.