Markets

What are the differences between stock CFDs and common stocks?

Trading Common Stocks

VS

Trading Stock CFDs

Cost position

Exposure

Cost position

Exposure

Trading Common Stocks

• When you purchase a stock, you are purchasing a part of ownership in a company, therefore becoming a shareholder.

• You get benefits like dividends and the right to vote on issues like the board of directors.

• Traded on exchanges where you can buy or sell the stocks directly.

Trading Stock CFDs

• When you purchase a CFD, you are purchasing a contract to track the performance of an underlying stock. You do not become a shareholder of the underlying stock.

• Not traded directly on an exchange, traded as a contract between you another party.

• The value of the CFD will rise and fall with the stock price it tracks, much like a common stock, so you can profit off the rise or fall of the value of the stock without direct ownership.

• You don’t receive voting rights but will still receive dividends. If you short a stock CFD, you will have to pay dividends if required.

• Stock CFDs can only be traded on margin.