How to Profit from Downtrend Markets and Falling Prices?

How to Profit from Downtrend Markets and Falling Prices?

Futures and CFDs Could Be your Choice.

As the recent high inflation environment caused central banks to hike interest rates and, subsequently, pushed stock markets into bearish territory, many investors panicked. However, investors could potentially profit from this downtrend by short selling in futures and CFDs.

What are Futures and CFDs?

Futures are agreements between two parties to buy and sell a specified quantity and quality of a specific underlying instrument in the future at a price determined today.

Meanwhile, CFD is a contract made between a buyer and a seller to gain exposure to an asset without having to take ownership of the underlying instrument whereby differences in the settlement between the open and closing trade prices are cash settled. Currently, CFDs are offered to sophisticated investors (i.e. any person who falls within any of the categories of investors set out in Part 1 of Schedule 6 and 7 of the Capital Markets and Services Act) only in Malaysia.  

What are the advantages of trading Futures and CFDs over traditional stocks in Bursa Malaysia?

There are a few advantages of Futures and CFDs over traditional stock investing: which are (1) the ability to short sell in a bear market, (2) the ability to use leverage to maximize your potential return, and (3) longer trading hours when compared to traditional stock trading.    

The table below are some comparisons between futures, CFDs and traditional stock trading:

So, how you can calculate your gain when trading futures and CFDs:

Futures trading

CFD Trading

However, due to the highly leveraged nature of both futures and CFDs, you may face huge potential losses too, even as the market moved slightly against you.

The risk of loss in CFD trading can be substantial and you may lose more than your initial investment. CFD investors are not the actual owners of the underlying instrument itself and do not have any rights over the underlying instrument.

Hence, you should understand your risk appetite and weigh the pros and cons before you start trading futures and CFDs.

If you wish to know more, we have prepared a few sources where you can learn more about futures and CFDs:

– Futures: &

– CFDs:

Now that you have learned about how futures and CFDs work, are you ready to bring it to the next level?

Participate in a short quiz campaign organized by InvestingNote and CGS-CIMB Futures Sdn Bhd and get a chance to win Nintendo Switch, Apple Watch Series 7, 1g of gold bar, Touch N’ Go eWallet credit and a prize pool worth RM 8,000.

How to participate? Look out for our post on InvestingNote Malaysia Facebook on 18th July, we’ll be announcing the campaign very soon!

The challenge has started! Click here to begin:

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