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Want to use investment portfolios to diversify risks? Commodity trading!

2021-11-04 16:21:14

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1. Hedge against inflation

2. Portfolio diversification

3. Risk Management

4. CFDs on commodities

5. CFD trading platform JRFX

Although there are many reasons to start commodity trading, you have to pay attention to the two most distinctive commodity trading representatives: inflation hedging and portfolio diversification.

01

Hedge against inflation

Inflation rate refers to the speed of currency depreciation, which means that the purchasing power of today's currency will decrease in the future. In other words, buying the same quantity of a given item in the future will cost more money. Hedging is a risk management strategy that reduces losses in the event of unfavorable price fluctuations in the opposite market by establishing positions in one market. Investors usually invest in precious metals to hedge against periods of high inflation.

02

Portfolio diversification

Diversified investment is another risk management strategy executed by distributing funds to multiple assets. No matter which trading strategy is followed, diversified investment is essential. Traders prefer some diversified investment portfolios that can be separated from traditional securities. Because commodity prices tend to be the opposite of stock prices, some traders prefer commodity trading strategies during market turmoil to enrich their investment portfolios and reduce the correlation coefficient between investment products to effectively diversify risks.

03

Risk Management

Commodities are an asset class that can be used to diversify investment portfolios and better manage risk. In terms of risk management, you must keep in mind that trading commodities may bring high risks. Compared with other major asset classes, bulk commodities have the highest volatility, mainly because the bulk commodity market is affected by unforeseen events such as natural and man-made factors. When using futures contracts to trade commodities, large fluctuations and large price fluctuations may occur. Although every commodity is affected by unique factors, the relationship between supply and demand is always the eternal theorem for trading bulk commodities. JFRX Investment Academy has analyzed the influence of various supply and demand relations on the price of commodities in detail for you, and you are welcome to learn in time.

04

CFDs on commodities

CFDs provide an effective way to trade popular commodities because of higher leverage, allowing traders to use less capital to gain greater risk exposure. It is also a strategy to judge price trends without obtaining the actual ownership of the goods themselves. CFD trading usually also comes with leverage, which means you can trade with only a small part of the total asset value. Nevertheless, what investors have to notice is that leverage is a double-edged sword: it can magnify your gains, and it can also magnify your losses.

Special features of CFD:

1

Easy to use. When investors trade commodities with CFDs, they will not involve the actual ownership of the gold, so they can avoid complicated transaction procedures.

2

Two-way profit opportunities. CFDs allow investors to trade the future price of commodities from both long and short directions. The rise or fall of the future price will not affect your profit from the difference between the price and the current price.

3

The threshold is low and the return is high. CFDs implement a margin trading system, using the principle of leverage, you can use a small amount of funds to conduct large transactions, and at the same time obtain higher returns under the magnification of leverage.

4

The number of trading lots is small. The size of a standard CFD is 1 lot, but you can start trading with a minimum of 0.01 lot.

5

One trading account invests in multiple products. After investors open a CFD account on the trading platform, in addition to gold, you can also invest in nearly a hundred popular investment products such as foreign exchange, commodities, and cryptocurrencies.

6

Break through time and space constraints. CFDs are open to traders 7*24 hours, and investors can complete all trading operations at any time through the Internet without leaving their homes.

05

Introduction of CFD trading platform JRFX

In addition to the advantages of CFDs I mentioned, any investment method has its own risks, and CFDs are no exception. The first is that CFDs implement a leverage mechanism. Under the effect of leverage, profits or losses will multiply. Therefore, I suggest that investors must assess the losses they can bear before establishing a position. Secondly, in addition to the price difference, overnight fees will be incurred for holding positions overnight. This fee changes in real time. Although the fees are not high, traders also need to take them into account when calculating the cost. Finally, some CFD trading platforms charge high handling fees. Therefore, it is best for investors to choose a platform with formal supervision and transparent fees.


As a well-known broker, with an experienced financial team, JRFX is committed to providing customers with the highest quality service, technical support and trading experience. JRFX is subject to the supervision of the authoritative financial institution BVIFSC and the Dubai Multi-Commodity Exchange Center (DMCC). Since our establishment in 2010, a total of 3.8 million account registrations have chosen JRFX. Your choice is the choice of most people, and we will Efficient response to give back to every customer is one of our values, because we only want you to be one step ahead of others. If you want to trade Bitcoin in the form of CFDs, JRFX is a very recommended trading platform for you.

Unique advantages of JRFX:

1

Easy to operate

The operation interface of the JRFX platform is simple and generous. JRFX provides multiple platforms for computers, mobile phones, and iPads, and supports multiple device systems such as Windows, MAC, iOS, Andriod. They are consistent from content to function, making it convenient for you to trade anytime, anywhere.

2

Rich trading products

In JRFX, you can not only trade cryptocurrencies, but also trade nearly a hundred popular financial products such as foreign exchange, commodities, and indices at the same time.

3

Low transaction costs

In order to reduce the transaction cost of investors, JRFX provides different account types to choose from, and there is always one that suits you best.

4

Simple transaction steps

JRFX only needs four steps from opening an account to placing an order, and the subsequent order transactions and deposits and withdrawals are also guaranteed to be extremely fast, which truly brings users a better trading experience.

5

Higher leverage

JRFX provides customers with a higher leverage ratio within a reasonable range for different financial products. This means that when you buy the same product with the same principal, you can get several times or even higher investment income in JRFX.

6

Free trading tools

JRFX provides customers with a variety of practical and free trading tools is another highlight of it. You can use various trading tools to fully and accurately grasp market trends and make predictions.

7

Transaction risk management

For risk control, JRFX also pursues the ultimate. In addition to real-time risk monitoring of your account, it also provides functions such as setting stop profit/stop loss, trailing stop loss, etc., to ensure the safety of your transactions in all aspects.

The JRFX account opening process is also very convenient, all can be completed on the Internet.


Risk WarningThe above content is for reference only, and does not represent JRFX’s position. JRFX does not assume any form of loss caused by any trading carried out in accordance with this article. Please consult your financial planner for your investment portfolios and manage your own risk.


JRFX is an online CFD broker providing more than 50 products for Forexmetals and commodities. Open a trading account within a minute. Deposit 100USD and download our MT4 trading platform now! We have unprecedented promotion program!


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