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What’s the difference between CFD and share trading?

The main difference between CFD trading and share trading is when you trade a CFD you don't own the underlying share.

With a CFD you never actually own the asset or instrument you have chosen to trade, but you can still benefit if the market moves in your favour, or make a loss should the market move against you. With share trading however you enter a contract to exchange the legal ownership of the shares for money and you own this equity.

CFDs are a leveraged product, which means that you only need to deposit a small percentage of the full value of the trade in order to open a position. With share trading you purchase the shares for the full amount owing either using individually-held electronic funds or a margin loan.

Categories CFDs Share trading
Range of markets you can trade Over 9,500 products. Including Forex, Equities, Commodities, Indices, etc Equities and ETFs
Long and Short Can trade both rising and falling markets Can only profit from asset price increases
Trading hours CFDs can be traded up to 24-hours 5 days a week Only when the Stock Exchange is open
Costs of trading Spread (excl. shares), Holding Costs, Commission Commission
Dividends A cash adjustment is made to reflect dividends. Yes - As per company
Leverage Yes No
Own the asset No Yes

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What are CFDs?

Contracts for difference (CFDs) are derivative products which enable you to trade on the price movement of underlying financial assets (such as forex, indices, cryptocurrencies, shares and commodities).
Learn more about CFDs

What is share trading?

Share trading in the underlying market is the buying and selling of company shares with the aim of making a profit. Shares represent a portion of ownership of a public company. Learn more about share trading.
Learn more about share trading

What is leveraged trading?

One of the advantages of trading CFDs is that you only need to deposit a percentage of the full value of your position to open a trade, known as trading on leverage. Remember, trading on leverage can also amplify losses, so it's important to manage your risk.

What are the costs of trading CFDs?

There are a number of costs to consider when trading CFDs, including spread costs, holding costs (for trades held overnight which is essentially a fee for the funds you borrow to cover the leveraged portion of the trade), rollover costs for expired forward trades, and guaranteed stop-loss order charges (if you use this risk-management tool). Find out more about our CFD costs

What are the costs of share trading?

The most common cost of share trading is brokerage rates. There are also some additional costs when trading on the CMC Markets Invest platform as well. Find out more about the costs of share trading