Hedging is a strategy that allows you to reduce the risk of negative price movements in your portfolio. Hedging refers to opening an equal but opposite position to offset any short term price movements in your physical shares.
If you hold shares in your portfolio that you wish to protect from a potential negative price movement you can open an equivalent short CFD position to protect their value. If the CFDs are bought back after a decline, then the profit achieved from the CFD trade should offset the loss incurred on your physical shares.
CFDs are a flexible and cost effective way to protect the value of your physical shares while retaining your holdings and without incurring a CGT liability.
View our Hedging Case Study