Quiz: which of these unusual CFDs can you trade?

Alpari has recently launched a new range of exciting asset classes, expanding their service to traders - 10 soft commodity CFDs. To celebrate, the award-winning broker has created a quiz that demonstrates the possibilities open to you when you diversify your trades.

We all know how exciting CFD trading can be, whether you’re going short or going long, anticipating how the markets will turn. This type of trading is fast-paced, sometimes risky - and sometimes very profitable.

But the range of CFDs you can trade goes far beyond traditional assets like forex and indices.

Can you guess which of the following products are available to trade as CFDs with Alpari?

1. Agriculture and farming is an area that has grown to become a market worth $13,398.79 billion worldwide as of last year. As the world’s population increases, demand for food and other agricultural products grows too - despite COVID-19 pandemic setbacks, the industry is thriving. But what CFDs can you trade in agriculture?

1. Wheat
2. Wheelbarrow production
3. Slug risk

The answer is wheat - it’s an interesting market for traders who are looking to diversify, offering several distinct advantages. The wheat market is highly volatile with frequent fluctuations, giving CFD traders plenty of opportunities to go short or go long. However, as one of the most popular crops in the world, there is always demand. A wide range of factors can influence the value of wheat, from weather affecting crops to geopolitical events.

2. Crypto is a popular asset class, with many traders watching the movements of Bitcoin and other alternative currencies. But can you actually trade crypto as a CFD?

Yes

No

The answer is yes, you can! Crypto is well known for its volatility, with significant changes in value being a frequent occurrence for many currencies. Smaller, lesser-known cryptocurrencies are even more volatile than big names like Bitcoin. This serves to make crypto very attractive for CFD traders. Cryptocurrencies are always traded in pairs like Forex, against another form of currency.

3. Coffee is a big business, projected to reach a value of US$112.4 billion by 2028, and the industry is home to some of the most popular global consumer brands. But what part of the coffee industry can you trade as a CFD?

1. Coffee Robusta
2. Coffee Arabica
3. Starbucks

The answer is all 3. You can trade coffee itself as a CFD, benefiting from the volatility and fast pace of this market. You can also trade Starbucks stock as a CFD*, and there are numerous reasons why a trader might want to do this rather than simply buying stocks. Trading using leverage could maximise your profits and you can go short to speculate on a price drop. Trading stocks as CFDs in addition to commodities can be a smart move for many because by spreading the risk around different asset classes, you are diversifying your portfolio.

*Not available to Alpari customers in some regions.

4. As well as coffee, other food commodities are available for traders. Which of the following food commodities can you trade as CFDs?

1. Sugar
2. Peanuts
3. Cocoa

You can trade sugar and cocoa on Alpari. This is an especially exciting time to get involved in cocoa CFD trading in particular, with high, volatile prices affected by the global shortage of cocoa beans. Traders who correctly predict the next shift in price could stand to make a significant amount of money. Sugar is another interesting commodity, which can fluctuate in price due to factors such as new food regulations. For example, higher taxes on sweetened beverages with a high sugar content have been introduced in at least 54 countries including the UK, Mexico and South Africa.

5. When trading CFDs, what should you look out for in a broker?

1. They work with top tier banks and other reputable financial institutions and intermediaries
2. They offer segregated funds, so that your funds are separate to theirs
3. They DM you with opportunities that made them money, so you can too

The answer is a) and b). A trustworthy broker should use top tier banks to keep your money safe when you make a deposit to use for trading. Any good broker will use segregated funds, meaning that your money doesn’t get mixed in with the broker’s capital, and cannot be used by the business for anything other than facilitating your own trading activities.

Brokers will not DM you on social media, using high pressure sales tactics to encourage you to trade with them. This is a red flag that you are being targeted by a scammer - Alpari will never do this, so if someone contacts you claiming to be from this or any other legitimate company, they are not to be trusted. 

Alexey Efimov, Market Analyst at Alpari, comments:

“On Alpari, we have hundreds of markets in which our traders can search for opportunities. There’s a whole world out there beyond the most popular markets such as Forex - diversifying your portfolio is a great method many people use to spread risk. The more markets you are involved in, the less power any one asset has to make or break you.

“CFDs are an exciting way to trade. The opportunity to add leverage means that with a smaller initial cost to you, you stand the chance to earn a higher profit (although it means you can also lose more of your initial investment). Of course, that’s another reason why it’s important to spread the risk - so that it’s not all riding on one or two CFDs. This method of trading is available on all Alpari platforms, including Alpari Mobile available on the Google and Apple app stores, so you can trade on the go.”  

Why not branch out and try another way of trading, or add an unusual asset to your portfolio? There are plenty of opportunities to profit by catching the wave at the right time. But as you can see from Alpari’s quiz, there are far more CFDs than just traditional commodities. There are hundreds of markets available on Alpari’s platform, including CFDs and other exotic derivatives.

Trading is risky.