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CFD Instruments

Trading CFDs and Forex may expose you to significant losses

CFD Instruments

Commodity CFD

Trading the commodity markets might be one of the oldest professions in the world. Many centuries ago, people were already trading in basic commodities such as cotton and gold in places spanning across the globe - from ancient China to Egypt. Today, people can trade soft-commodities such as rice and wheat, energy products such as natural gas and crude oil, and base and precious metals, including iron ore, copper, gold, and silver electronically from their mobile, laptop or desktop devices.

In our modern world of trading, commodity futures markets have a central role for the global economic machine. Both producers and consumers of commodities, as well as speculators, are actively participating in the market aiming to either hedge their exposure to physical trade or simply to realize financial gains. It is a well-known fact that commodities markets have long been associated with speculation and risk-taking given ample opportunities due to high price volatility. That said, they were originally intended to be used by farmers to lock in the price their products.

Over recent years, a different tool became available to retail and institutional investors worldwide, making it easier for traders of various sizes to make bets on commodities markets price swings.

CFD brokers such Amana Capital will quote CFDs prices on commodities, and although certain CFDs are based on the spot price of the underlying commodity, the majority of the commodity CFDs products we offer to our customers, use the futures market to calculate the underlying value of the asset.

Index CFDs

An equity index CFD is an over-the-counter financial instrument that is based on a given stock market index such as the S&P 500, the Dow Jones Industrial Average or the German DAX. Every index has stock constituents whose price determines its value.

If you'd like to trade the SPXUSD CFD with Amana Capital, you can make a prediction whether the price should rise or fall, and then place your trade accordingly. Other index CFDs from Amana Capital include the German Dax (D30EUR), The Dow Jones Industrial Average (US30USD), the tech-heavy index NASUSD, and many more.

Share CFD

Trading of CFDs on shares allows placing a bet on share price movements, without getting involved in physical buying or selling of shares. These CFDs are quick and accessible, diminishing the need for a stockbroker intermediary. In CFDs trading, short-selling of shares is easy, and also allows market participants to profit when markets are trending lower. When trading CFDs on shares, there is no need to put up the full value of the shares that one is trading with. Instead one may pay a deposit to cover any potential loss of the position. This deposit is typically a fraction of the full contract value.

A CFD contract is very similar to a share transaction. Unlike financial spread betting, there is no betting per point movement of the share price, rather the participant buys or sells a certain quantity of CFDs, equivalent to the number of shares traded.

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Trading CFDs and Forex may expose you to significant losses