What is the difference between CFD trading and share trading?

The key difference between CFD trading and share trading is that with a CFD you don’t take the ownership of the underlying stock – you just speculate on its price movements, whether upward or downward. Another vital difference between taking a position with a CFD and purchasing shares is the ability to make leveraged trades.

How do stock CFDs work?

When a trader opens a position with stock CFDs, they agree to trade the difference in price of the company’s shares between the time they open and close the contract. This method of trading stocks using CFDs is very different from actually buying a company’s shares.

What is CFD trading & how does it work?

Leverage: CFDs allow the use of leverage, which means traders can open larger positions with less funds. Note that leverage can magnify both profits and losses. Out-of-hours trading: Stock trading is only available whenever the corresponding exchange is open. CFD trading is sometimes available out-of-hours, depending on a broker.