What are CFDs?
CFDs are similar to spread betting in that you can bet on stock price movements without having to actually own the shares. The key difference is that spread betting is considered a form of gambling, so is free from capital gains tax and stamp duty, but CFDs are only free from stamp duty. But either can be closed out at any time.
What are the advantages of CFDs?
You don’t pay any stamp duty, unlike share purchases. And during the life of the CFD, you are entitled to any dividends paid or stock splits issued by the company whose shares you’re buying.
CFDs are available on a huge range of different assets including global indices, stocks, sectors, currencies and commodities.
CFD Trading provide access to the movement in the share price by putting down a small amount of the total market exposure - this is referred to as a margin.
You can go long or short. If you go long, you are entitled to dividends and pay daily interest (financing), if short, the reverse is applicable.