CFD Trading vs Share Trading: Specifics


Both CFD and share trading options can become a key to your success in the skillful hands. They have their specifics, advantages, and disadvantages, which you will quickly learn by checking this article. The major difference between these two types is still the absence of ownership of the share you trade on the CFD market. You don’t have the asset you trade, whether you are working with CFD trading commodities or finances.

CFD Trading vs Share Trading: Specifics

You can use this difference as your advantage while trading contracts for difference. All you need is the fraction of the total value of trade, which is known as margin. You are still able to reach a full exposure. It can increase the profits, but still, with poor performance, your losses may overcome deposits. Trading shares, you have to pay the full price. Yet, you can’t lose more than you’ve already paid.

CFD Specifics

Let’s start with CFD advantages and disadvantages first so that you can understand what you are up to choosing this trading system.

Main advantages:

  • There is a wide range of instruments for trading, including Forex, shares, commodities, and indices;
  • You can increase your capital with the specific leverage of this trade;
  • Choose whether you want to go short or long on the market based on your daily analysis;
  • You can offset the changes from your dividends;
  • You can trade on multiple markets.

CFDs disadvantages:

  • As it has been told before, you may lose more than you put in the first place;
  • There are no privileges for shareholders.

Share Trading Features

Share trading may look like it provides fewer options for traders, but you still have numerous benefits to see on the market.

Share trading advantages:

  • There is a limitation to the risk of money loss. You will not lose more than you already spent;
  • You can receive the dividends from the trading procedures;
  • You receive the privileges of a shareholder, including the rights of voting in the company of your shares.

Disadvantages of share trading:

  • You can trade only on the prices that are rising;
  • There is a limitation of your work. You can trade during the hours of work of stock exchange;
  • You have to pay the total value of the shares at first;
  • There is a limit of products you can trade by the ETFs and shares.

Detailed Comparison

It is time to compare these two markets since you already got an idea of the advantages and disadvantages of CFD and share trading. There are numerous benefits of each of them, but you have to focus on the most crucial aspects for you. By the way, you don’t need to limit yourself to the one trading type, as you can do both. The basic difference lies in:

  • Appearance. CFD relies on financial derivative trading. You trade on the prices of the market, without taking an active part in market trading. Share trading is a more active and rather more traditional type. You have to buy and sell shares.
  • No expiration date for both of them. This is a huge bonus for both of these types.
  • Time limitation. While there is no time limitation for trading the CFD market, and you can do it 24 hours a day, for share trading, you have to wait for the open hours of the particular exchange market.
  • Payments. You don’t actually need to keep paying for open positions when it comes to sharing trading. All you need to do is to pay for shares and act on your own risks. For CFD trading, you have to keep the overnight funding open for you. Yet, you don’t have to pay the whole price.
  • Profit. CFD offers you a profit from commission, funding, and spreads in case of success. You can go with the long and short options. As for the share trading, you receive commissions from the trade you paid.
  • Type of trading. CFD offers intra-day, medium-day, and daily trading. Share trading provides only long-term investing.

Choosing the Market

As was told before, you don’t have to choose one of the markets when you can choose both. Master your skills on both of them, and you will quickly earn a fortune. However, if you still want to settle on something, CFD is usually recommended to start with.


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