The main difference between trading CFDs (which are often referred to as contracts for difference) and trading real shares is that when you trade in CFDs you’re speculating on a market’s price without taking ownership of the underlying asset. However, trading shares mean that you do own the underlying stocks – and this comes with a range of advantages and disadvantages.

One benefit of trading CFDs over actual shares is leverage. You can trade CFDs on margin, meaning you’ll only need to put up a fraction of the full value of the trade to gain full exposure. This leverage means you have a bigger opportunity to profit – or to make a loss.  However, when you trade shares you’ll need to pay the full cost upfront, and you can’t amplify your profits hugely either.

At ZFX, we recommend trading stock CFDs as the best way for traders to take a position in this market.