Advantages of CFD trading

Unlike traditional share dealing, there is no stamp duty to pay on a CFD trade as you don't take physical ownership of the underlying asset. However, tax treatment depends on individual circumstances and can change.

With contracts for difference, 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.

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. Read more about trading with leverage​.

For example, to buy the equivalent of 10,000 telecom company share CFDs with CMC Markets, you may only need to deposit 20% 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 $1.50 then you would only need to deposit $3000 of position margin with us (20% of $15,000 = $3000) plus the applicable commission.