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How to profit from the market's moves with CFDs

by , 23 June 2015

Contracts for difference (CFDs) aren't just for trading shares. You can also use CFDs to trade exchange traded funds (ETFs).

This means you're not relying on the performance of a specific share with your CFD trade. You can potentially profit from the performance of a particular market, index or sector.

So how does this work?

Read on to find out…

The benefits of using CFDs to trade ETFs

The big benefit of trading ETFs with CFDs is you can potentially profit from the performance a market, index or sector rather than just the performance of one share.

For instance, if you think financial companies are going to do well, you could trade CFDs on an ETF tracking the performance of financial firms.

By trading ETFs with CFDs, you can take advantage of the overall market trend or trends in individual sectors. And many traders find this an easier way to trade than picking specific stocks.

Not only can you potentially profit from the rise in price of these ETFs, you can also short sell to take advantage of falling prices.

The types of ETFs you can trade with CFDs

There are a number of different ETFs you can trade using CFDs. Check with your trading company or stock broker to find out which ETFs you can trade CFDs on.

The ETFs you can trade CFDs on include:

  • Satrix 40: Tracks the JSE’s Top 40 Index.
  • Satrix Divi: Tracks the JSE’s Dividend Plus Index.
  • Satrix Fini: Tracks the JSE’s Financial Index.
  • Satrix Indi: Tracks the JSE’s Industrial Index.
  • Satrix Resi: Tracks the JSE’s Resources Index
  • NewGold: Tracks the gold price in rands.

You may also be able to trade ETFs that track offshore listed stocks.

So there you have it. How to profit from the market’s moves with CFDs.

How to profit from the market's moves with CFDs
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