Some "apples" in the gold portfolio. CFD trading

We hope you learned from our previous publication that it is profitable to work in unrelated markets. This is why professional investors tend to form so-called investment portfolios. Not only currencies or commodities can occupy a significant portion of such a portfolio, but also stocks. Which ones - that's the question we'll discuss today.

To begin with, let's define what constitutes stock. It is a securitywhich certifies its holder's right to receive part of the company's profits in the form of dividends (if they are paid), to manage the company's affairs (for certain types of shares) and to receive part of the company's assets in the event of liquidation.

Working with stock CFDsBut of all these rights, we can only take full advantage of the right to receive dividends. And that's if you are the buyer of the contract. And the seller, respectively, pays the dividends.

We've already talked about the fact that when we conclude a contract for, say, oil, we don't actually own a hundred barrels of black gold. The same is true for stocks. When we work with CFDs on stocks, we are not the actual holder of the stock and we cannot manage the company's affairs or have any claim to a part of the assets of the company. of the issuer at liquidation. But we can take full advantage of all the changes in stock prices that occur every day. After all CFD - is a contract for price differences, which allows you to earn on such changes.

What is the potential for this change?

Consider a very popular contract for shares of Apple Inc.. It is possible to adore or, conversely, not very much like the products of this company. But the fact is that the share prices of Apple Inc. show a stunning movement. You can assess them according to the figure, which shows approximate CFD prices at the end of the year.

Dynamics of CFD on shares of Apple Inc.

Fig. 1. Dynamics of CFD on shares of Apple Inc.

About $95 growth in 2007, a drop of $88 in 2008 and a rise of $120 in 2009, about $109 more in 2010... These figures tell us the extent of the changes, but don't yet show what kind of trading results we could get from these changes.

To calculate the result, we lack the knowledge of what is the volume of one CFD on a stock! For example, in FOREX CLUB, one stock contract is based on 10 stocks. Let's look at the figure and estimate that, buying 1 CFD on Apple Inc. in early 2010 at $213 apiece and sold that contract in early 2011 at $322 apiece, the result would have been $1,090 for 1 contract (don't forget that the contract is based on 10 apple shares). And if there were ten contracts? The result would be a little over the $10,000 mark. Of course, by the scale of rate changes we can estimate not only the profitability, but also the risks of working with these instruments. The same crisis year 2008 would bring the result to the holders of 1 contract about -$880, and for a deal of 10 contracts -$8,800.

But here we need to remember once again that "keeping all your eggs in one basket is risky.". Therefore, if a stock contract has a place in your portfolio, it obviously should not take up its entire volume.

In addition to CFDs on shares, of which, by the way, there are about thirty in FOREX CLUB, there are contracts on stock indices. With these CFDs, it is somewhat more complicated. What is gold or oil, a share of Coca-Cola Enterprises, Apple Inc. or McDonald's Corp. stock index many of us have not yet understood in detail. Let's try to do that, but in the next article.

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