ETFs

With CFD trading is that you only need to deposit a percentage of the full value of your position – the initial margin requirement – to open a trade, known as trading on leverage. Remember, trading ETFs on leverage can also amplify losses, so it's important to manage your risk.

As an example, let's say you want to put down a total of €1,000 on your ETF trade. Due to the leverage available with CFD trading (5:1 in this case), you would be able to enter this position with an initial outlay of €200, instead of €1,000. Your profits and losses are based on the full value of the trade (€1,000).

As a retail client, you automatically have negative balance protection, which means that you can never lose more than the available funds in your account.

When investing in ETFs, you buy and own units in the fund, and deposit the full value of your position upfront.

When spread betting or trading CFDs, you speculate on the price movements of an ETF without owning the underlying asset. This means you can take both long and short positions.

Spread bets and CFDs are leveraged products, meaning you only need to deposit a percentage of the full trade value to open a position.

There are a number of costs to consider when trading on ETFs, including spread costs, holding costs (for trades held overnight) and guaranteed stop-loss order charges (if you use this risk-management tool). View our trading costs for more details.

ETF trading offers better value when compared with trading each individual constituent of an ETF. There’s no cost to opening an account with us, and no minimum deposit.

Trading ETFs offers several potential benefits to traders. ETFs track a number of instruments within a single trade, so compared with trading on individual shares, ETFs can be less costly, while also offering more diversification. ETFs can also provide exposure to certain markets and assets that may not otherwise be available. Learn more about ETF trading.

All trading and investing carries a certain amount of risk, including ETF trading. However, when compared to trading on individual shares, an ETF comprises a wide range of related instruments. This diversification can help to reduce risk, because ETFs aren’t reliant on the performance of a single instrument. View our guide to managing your risk when trading.

Trading on shares focuses on trading a single company. ETFs instead provide exposure to a tracked market index, in a similar way to the S&P 500 or FTSE 100. ETFs also track a selection of assets that can include stocks, bonds and commodities, for example. Although an ETF is essentially a wrapper tracking several assets, they are still traded like a share. Find out more about how ETFs work.