What are the benefits of CFD
The benefits of CFD trading
Efficient use of your capital
One of the key advantages of CFD trading is that you can trade on margin, which gives you "leverage". This means that you can trade without having to deposit the total value of a position, and since your money is not tied up in one transaction, you can use it for other investment business.
Here's an example: to buy the equivalent of 10,000 telecom company's stock CFDs through CMC Markets, you may only need to deposit 20% of the total position value that you might have to pay if you were to buy physical stocks from a stockbroker.
For example, you buy CFDs worth 10,000 shares in a telecommunications company from CMC Markets. Let's say the minimum margin is 20%.
This means that you would only need to deposit 20% of the total value of the position (which would be due when buying the actual shares from a broker) as collateral. With a share price of EUR 1.50 you would only have to deposit a security deposit of EUR 3,000 (20% of EUR 15,000 = EUR 3,000) with CMC Markets. To conclude an equivalent deal with a stock broker, you would have to pay the entire amount of EUR 15,000 plus commission.
By investing with leverage, you can increase your profits. But it is important to know that your loss can increase to the same extent. Our platform offers you numerous functions for efficient risk management.
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