In addition to CFDs on oil, CFDs can also be traded on gas, which provides a number of distinctions from the oil markets while carrying much the same influence as far as the fuel and energy sectors are concerned. Like oil, gas is a commodity that is influenced significantly by the demands of businesses, consumers and governments across a number of individual sectors, and global reliance on gas is continuing to rise as the large developing BRIC economies, and those following in their wake, continue the increase in energy consumption. CFDs in particular provide a number of key advantages for those looking to get involved in the gas market, and as a comparatively more predictable market than oil, gas CFDs tend to be particularly suited to CFD traders with slightly less experience, or a slightly lower willingness to take on risks.
Why Trade CFDs On Gas?
CFDs are traded on gas for a number of very good reasons, both practical and financial, and the structure of CFDs, coupled with the nature of the gas market make this a particularly well-suited trading combination.
Firstly, CFDs are always cash-settled, so traders can at once rule out any concerns about physically trading in gas, such as warehousing, storage and the raft of other expenses that can be incurred when trading directly in commodities.
Based almost exclusively on the futures market, gas CFDs are a much cheaper way to tap into gas futures than going for futures directly, with much lower investment thresholds and significantly lower commission and transaction costs. And of course, this lower cost of transacting is equally applicable in both directions, so it can be straightforward to go long or short on gas, depending on the way the market looks to be heading.
Furthermore, gas CFDs afford significant leverage at this low-cost price point, which maximises value for money for the trader – with lower expenses and often greater leverage, CFDs with gas futures are an understandably popular trading combination. And because the gas market is comparatively easier to call than the market for oil and other commodities, the ability to ramp up your exposure at a low cost base and with considerably smaller minimum purchase levels makes CFDs an attractive tool for trading in gas.
Who Trades CFDs On Gas?
CFDs on gas are traded by a range of different investment bodies, ranging from commodities traders, CFD traders and price speculators through to the major investment institutions and virtually anyone else looking for leveraged exposure to the gas markets without the hassle of trading directly in futures. Cutting out much of the difficulties presented with trading in futures, which can be a somewhat cumbersome instrument for smaller traders to navigate, CFDs provide the ideal model for investing in the comparatively more predictable, yet still lucrative gas futures market.
What each of these groups of investors have in common is a desire to profit from gas price rises in an efficient, highly-leveraged way. By taking positions in the gas markets through CFDs, traders from all ends of the spectrum can better capitalise on underlying price movements, to deliver a more cost-effective, profitable, and downright more straightforward transaction.
How To Trade CFDs On Gas Effectively?
Trading gas CFDs effectively depends on understanding what factors prompt gas prices to rise and fall. Much like oil, gas is a central commodity in the supply of energy, and as such is led by consistent and growing demand from all four corners of the globe. Fortunately for traders, gas is not as heavily traded a commodity as oil, and so the market tends to be slightly less volatile and less dynamic in terms of how it responds to and prices for external price triggers. This means there is low hanging fruit for traders to take advantage off in the gas market, and with the interplay of leverage from trading CFDs, this can spell profitable trading for those that are on top of their game.
To trade gas CFDs effectively, it is therefore vital to keep up to date with current affairs, including political developments as they relate to energy and gas producing nations, while also keeping on top of supply and demand figures as they are published. This will enable you to build a better picture of how the market operates, and should point towards opportunities for profiting from gas price fluctuations.