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Equity CFDs represent a derivative contract that allows investors to speculate on the price movements of a particular stock without actually owning the stock.

KID – CFDs on Shares

*The Company reserves the right to widen spreads, reduce leverage, increase margin requirements, control maximum order amounts and limit customers’ total exposure. To see the current overnight rollovers for instruments traded on WebTrader, click on the instrument in the table above. For full list of instruments click here.

** The above prices are only for indicative purposes

*** Quotes are delayed

More information

What is Contract for Difference (CFD)?

A CFD is an agreement between an investor and a CFD provider, usually a broker. This agreement reflects the difference in price of an underlying asset (such as a share) from the time the contract is entered into to the time it is terminated. In other words, if the price of the underlying asset increases, the investor will gain the difference, while they will lose the difference if the price falls.

What is Equity CFD?

In the case of equity CFDs, the underlying asset is shares in a company. The investor enters into a CFD contract with the broker based on the price movements of the share. They do not need to buy or own the actual stock. Instead, they will speculate on whether the price of the stock will rise or fall, and make or lose money based on these speculations.

But how does it work?

Let’s say an investor believes that the price of the stock of company ABC will rise. Instead of buying actual shares in ABC, they can open a long position in the stock CFD for ABC with a broker. If the price of the ABC share increases as expected, the investor will make a profit equivalent to the difference between the buy price and the sell price of the CFD contract. Similarly, if the price falls, they will lose money.

What are the pros and cons?

The benefits of trading equity CFDs include the ability to trade with leverage, lower costs than trading actual shares, and the ability to make money both when the price rises and falls. However, it also involves the risk of loss, especially due to high leverage, and it is important to understand and manage this risk before trading CFDs.

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