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Trends & Analysis
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TJX announces strong sales, dividend hike

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Who wins the S&P 500’s bank battle?

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USD/JPY edges lower on economic data

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Li Auto shares race ahead on upbeat earnings

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Can anything stop NVIDIA?

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Gold rises on soft dollar, geopolitical concerns

Trends & Analysis
News

TJX announces strong sales, dividend hike

News

Who wins the S&P 500’s bank battle?

News

USD/JPY edges lower on economic data

News

Li Auto shares race ahead on upbeat earnings

News

Can anything stop NVIDIA?

News

Gold rises on soft dollar, geopolitical concerns

Cash and carry definition

Cash and carry is a trading strategy where an investor purchases an asset and simultaneously sells a futures contract on the same asset. It is typically used in commodity markets, specifically for physical products that can be stored. Investors aim to use this strategy to profit from the difference between the spot price and the futures price, while also earning a return from holding the underlying asset.

 

Example of cash and carry

An investor believes the price of gold will rise, but they do not want to take on the risk of owning physical gold. They decide to use the cash and carry strategy.

The investor first borrows money from their broker at a low interest rate. They then use the borrowed money to purchase a gold futures contract that will expire in two months. They hold the contract until it expires, and when they receive the delivery of the physical gold, they sell it in the market at the higher market price.

The investor earns a profit, derived from the difference between the low interest rate they paid to borrow the money and the higher market price they received for the physical gold they sold.

 

Benefits and limitations of the cash and carry strategy

The major benefit of this strategy is the potential for investors to profit from the price difference between the cash and futures markets. Investors may also use this strategy to hedge against market risks.

However, this strategy requires a significant amount of capital to implement. Investors must also be able to predict market movements accurately, which can be difficult to achieve consistently.

 

Start trading with ADSS

ADSS offers a range of global markets for traders, with opportunities in indices, commodities, forex, equities and more. We also feature tutorials, how-to guides, and weekly webinars to help you navigate the financial markets and find better trading opportunities. You can start trading and investing online by opening a live trading or demo trading account.

 

See all glossary trading terms


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Investing in CFDs involves a high degree of risk that you will lose your money due to the use of leverage, particularly in fast moving markets, where a relatively small movement in the price can lead to a proportionately larger movement in the value of your investment. This can result in loses that exceed the funds in your account. You should consider whether you understand how CFDs work and you should seek independent advice if necessary.

ADS Securities LLC (“ADSS”) is authorised and regulated by the Securities and Commodities Authority (“SCA”) in the United Arab Emirates as a trading broker for Over the Counter (“OTC”) Derivatives contracts and foreign exchange spot markets. ADSS is a limited liability company incorporated under United Arab Emirates law. The company is registered with the Department of Economic Development of Abu Dhabi (No. 1190047) and has its principal place of business at 8th Floor, CI Tower, Corniche Road, P.O. Box 93894, Abu Dhabi, United Arab Emirates.

The information presented is not directed at residents of any particular country outside the United Arab Emirates and is not intended for distribution to, or use by, any person in any country where the distribution or use is contrary to local law or regulation.

ADSS is an execution only service provider and does not provide advice. ADSS may publish general market commentary from time to time. Where it does, the material published does not constitute advice, or a solicitation, or a recommendation to a transaction in any financial instrument. ADSS accepts no responsibility for any use of the content presented and any consequences of that use. No representation or warranty is given as to the completeness of this information. Anyone acting on the information provided does so at their own risk.