The advantages of CFD trading

What are the main benefits of CFD trading?

Trade on both rising and falling markets

With CFD trading, you can trade on the price of a product going down as well as up, so you can try and benefit from selling (shorting) as well as buying opportunities. Many investors use CFDs as a way of hedging their existing portfolios through periods of short-term volatility.

Efficient use of your capital

One of the key advantages of CFD trading is that you can trade on margin, which gives you 'leverage'. This means you can trade without having to put down the full value of a position. As your money is not tied up in one transaction, you can use it for other investments.

For example, to buy the equivalent of 10,000 telecom company share CFDs with us, you may only need to deposit 5% of the total position value that you might have to pay if you were buying physical shares from a stock broker.

If each share cost 150 cents then you would only need to deposit $2250 of position margin with us (15% of $15,000 = $2250) plus the applicable commission, which in this instance would be $100.

To complete the equivalent trade with a stockbroker you would have to pay the full value of $15,000, plus commission and taxes.

Note: trading using margin means you can magnify the returns on your investment but it is important to remember that losses will be magnified as well. There are many order types and execution tools on our platform that help you manage your risk effectively. Learn more about our software, which has been voted as best CFD trading platform¹ for several years.