How to trade CFDs?

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

Traders and investors need access to advice and opportunities in the markets. At SVS our advisory service gives you access to a hand picked team of CFD professionals to keep you informed of the market opportunities as they emerge.

When you trade CFDs with SVS, you are appointed a dedicated broker backed up by our in-house analysts who will be on hand to ensure you get started as a CFD trader quickly and efficiently. The CFD team provides you with the latest trading recommendations based on in-depth research as well as strategic advice on how to succeed in the marketplace using CFDs. Along with cost-effective charges, our advisory service is perfect for an efficient way of trading the markets, with the benefit of high-quality advice.

Whether you are taking our advisory service or trading execution-only, 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.