Advantages of a CFD

October 18, 2011


  • Trading long or short. This enables you to take a positive or negative view of the underlying share’s price movements, and therefore to be able to profit in both rising and falling markets.  It also allows for hedging action to protect long-term share holdings.
  • Cost effectiveness.  Because no share certificates are issued, you do not have to pay safekeeping or custody fees, STRATE costs, investor protection levies and Securities Tax.
  • Via leverage, you can control larger positions at a fraction of the cost of actual share ownership.  Instead of having to pay the full value of the underlying contract up front, you need only deposit an initial margin – usually about 10% of the contract value.
  • Profiting from corporate actions. CFDs allow you to benefit from dividends, stock splits, and movements in and out of specific Index groups.
  • Deal immediately at the market price. There is no extra spread to pay when trading CFDs (as is the case with financial spread betting). This means that deals can be negotiated immediately, without any wait for a spread to be established.

See the Frequently Asked Questions for more…



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