Advantages of CFDs
Learn why CFD trading may be for you
Over the last 15 years traders and investors have become increasingly sophisticated and knowledgeable about managing their own finances. CFD trading has increased in popularity as self-directed investors have realised the benefits over more traditional forms of investing. These are some of the benefits of trading CFDs online with CMC Markets:
No stamp duty
Unlike traditional share dealing, there is no stamp duty to pay on a CFD trade.
Profit when markets fall as well as when they rise
With CFD trading, you can trade on the price of an instrument going down as well as going up. It doesn't matter which way the markets are going, you can back your judgement either way, exploiting selling opportunities just as easily as buying opportunities. Many investors use CFDs as a way of hedging their portfolios.
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 you can trade without having to put down the full value of a position and, as your money is not all tied up in one transaction, you can use it for other investments.
For example, to 'buy' the equivalent of 1,000 telecom company shares in CFDs with CMC Markets, you would only need to deposit 3% of the total transaction amount you might have to pay if you were buying physical shares from a stock broker. If the shares cost 150p then you would only need to invest an initial deposit of £45 with CMC Markets (3% of £1500 = £45). To complete the equivalent transaction with a stockbroker you would have to pay the full value of £1500, plus commission and taxes.
Click here to see a more detailed CFD trading example.
Trading on margin means you can magnify the returns on your investment, but it is important to remember that losses will be magnified as well. There are many features on our platform that help you manage your risk effectively. Use our flexible orders, including stop losses, trailing stops and take profit orders to limit your risk. These orders are simple to understand and they’re free to use.
Access to global markets
With CFD trading you aren't just limited to trading on share prices. You have access to a whole host of global indices, commodities and currencies.
No minimum trade size!
Unique to CMC Markets’ CFD trading platform is the flexibility to decide your own trade size. We call this feature ‘fractional ownership’. With fractional ownership you can buy and sell CFDs by units or amount. You can trade from as little as 1/1000 of a unit, or a specific monetary amount. This allows you to own a fraction of the asset, and sets new standards in the area of asset allocation – you have far more control over the amounts you invest in different trades.
Customisable margin
We know that margin and high leverage do put some investors off, as the associated risks are sometimes viewed to be too high. CMC Markets now offers a unique feature called customisable margin, which puts you in complete control of the amount of leverage you want to take on. You can even choose to have zero financing and pay for the position in full. Or you can trade on the minimum amount of margin we offer for the instrument you want to trade.
Create your own product basket
Our portfolio mixer allows you to pick and choose your favourite products and combine them all together in one adjustable mix. You can include commodities, indices, currencies or companies in your mix by simply dragging and dropping as many products as you like into the mixer.
Trade in your local currency
We automatically convert all your positions and trades into your local currency using our FX spot rates. When dealing with instruments that are traded in other currencies you no longer need to calculate this back into your home currency. You now know your financial position instantly.
Education
CMC Markets is committed to the education and the ongoing training of our customers. Our education team provide webinars, seminars and online learning modules, catering to people with a wide range of trading experience, as part of our ongoing education program for potential and existing customers. Whether you’re a beginner or are already trading CFDs, our education program is intuitively tailored to your level of experience.