subject: Hedging Using CFDs [print this page] Using short CFDs to hedge your investments is a good way to protect the portfolio since share prices are volatile and they may move radically up or down, depending on the various market conditions prevalent at that time. Very often, an investor may hold a long term position for a particular equity, but in the short term, the stock may become flat or even plummet. In such an eventuality, a prudent investor would do well to enter into an equal number of CFDs to account for the risks involved. This opposing force will balance the negative forces that may erode the investment. CFD trading is therefore, an intelligent and effective way to counter the risks involved in the volatile capital markets
