CFD stands for Contract for Difference. It’s an agreement between a client and a broker, who are exchanging the difference in the current value of an instrument (stock, currency, commodity or index) and its future value. CFDs provide traders with the all the benefits and risks of owning an instrument without actually owning it.
You can trade stocks in the form of CFDs and in the form of Equities.
To find CFDs on our platform look for the instruments marked with the “CFD” label.
Buying CFDs on stocks doesn’t make you a shareholder of the company. Nevertheless you will receive payments equivalent to dividends just like regular shareholders. You will not have the right to vote on major issues or receive a final distribution in the event of corporate liquidation.
It is important to know that CFDs are traded with leverage and you can short sell them.
There are several main differences when trading CFDs on stocks compared to trading Equities:
- Trading with leverage
- Making profits from falling markets (short selling)
- No stamp duty on UK stocks
You can see a complete comparison between both in the table below:
|Trade CFDs||Trade Equities|