Trading Share CFDs
Trading shares is a very popular practice for more than a century. Share CFDs are financial instruments that mirror the price of a particular share by offering great advantages such as high capital leverage, advanced platforms, multiple orders, tax exemptions etc.
Trade any Market and Any Market Direction
CFD providers offer shares from all around the world:
Share CFDs offer trading in both market directions (profit from both bull and bear markets).
Share CFDs Explained with a Simple Example
CFD contracts or "Contract for Difference" can be used for trading popular shares. CFDs offer many advantages to its holders without imposing them high deposit requirements. Let’s suppose that a CFD trader wants to invest in the Apple stock (AAPL) before the release of the new iPhone. This trader wants to buy 1,000 shares of AAPL worth $100,000. The Apple share is trading at $100. He has two options in order to trade the Apple stock:
(1) He can buy 1,000 shares of Apple directly from his stock-broker. In this case, he will have to deposit at least $50,000 as his stock-broker which offers him maximum leverage 2:1.
(2) He can buy CFD on Apple Share. In this case, he will use leverage 50:1 and he will have to deposit $2,000 as margin to his CFD provider.
Comparing the two options
(i) The difference in margin requirement is great. Many traders do not have $50,000 free for trading but most traders can afford to deposit $2,000
(ii) The difference in commissions paid is great too. Trading CFDs is considerably cheaper than trading physical stocks
(iii) CFD position offer tax exemptions
Stock-Indices trend very well without the annoying 'market noise' of other financial instruments. That means you can ride a strong trend using high capital leverage and by placing a narrow stop-loss order. The spreads when trading popular indices are considerably tight.
Trading shares is completely different and you should use very limited capital leverage. Do not trade shares intraday.