10 FAQs about share CFDs

1. What shares are available to trade?

With markets.com we offer leveraged trading on CFD over stocks with low spreads. Trade shares listed in major and minor markets all over the world. Easily long or short individual shares according to your trading decisions and risk apatite.

2. Is trading share CFDs safe?

When considering leveraged trading products like CFDs, it’s crucial to understand the inherent risks. Leveraged trading magnifies both potential gains and losses, making risk management essential.

Strategies such as setting stop-loss orders, managing position sizes, and maintaining a clear trading plan can help mitigate risk. Additionally, regularly reviewing and adjusting your risk management strategies based on your trading style and market conditions can enhance your ultimate trading effectiveness. Markets.com offers a comprehensive range of educational resources to help you better understand risk in trading and ways to manage it.

3. When you buy share CFDs, do you own the underlying asset?

When trading Share CFDs, you are not acquiring ownership of the underlying asset itself. Instead, you are speculating on the price movements of that asset. This means you can profit from both rising and falling markets without holding the actual shares. However, it's important to remember that, because you don't own the underlying asset, you won't receive dividends or voting rights associated with traditional share ownership. The ultimate goal in trading Share CFDs is to capitalize on price fluctuations, so effective risk management and market analysis become crucial to potentially navigate this leveraged trading environment successfully.

4. What hours can I trade CFDs?

At markets.com, stock CFD market hours duplicate the hours of the actual markets in which the relevant stocks are traded. Essentially, this means 9.30am to 4pm on week days for stocks traded on US indices and 3am to 12pm for stocks traded in the UK.

Trades cannot be placed outside these hours and positions that remain open overnight will next be affected by the following day’s initial trading.

5. How is share CFD trading regulated?

CFD trading is heavily regulated to protect the interests of traders. Markets.com has been in business since 2009, and they’re fully regulated in five different major markets, including Cyprus and the UK. Markets.com is a global company with more than 5M registered accounts which is regulated in Europe, UK, BVI, Australia and South Africa. They prioritize providing a secure and technologically advanced trading environment. The platform adheres to stringent regulatory standards, ensuring transparency and client protection.

6. What are the steps of trading share CFDs?

1) Open a live trading account
2) Log in on markets.com
3) Fund your account
4) Find your first trade

7. Why trade CFDs rather than just buying stocks?

CFD trading offers significant advantages for those seeking to utilize leverage, a feature not available in standard stock transactions. While leverage can enhance potential profits, it also amplifies the risk of losses. In CFD trading, you don’t need to pay the full value of a position upfront; instead, you only need to cover a deposit called margin. This approach allows you to speculate on market price movements without actually purchasing the underlying assets. This principle mirrors that used in forex trading, where you trade on price fluctuations rather than owning the actual asset.

8. How does leverage work in stock CFDs?

In stock CFDs, leverage allows you to control a larger position than your initial investment by borrowing funds from the broker. For example, with 10:1 leverage, you can control $10,000 worth of stock with just $1,000 of your own capital. This means that both potential gains and losses are amplified. If the stock price moves in your favor, you could see substantial returns relative to your initial margin. Conversely, if the price moves against you, your losses can also be significant. Leverage magnifies both risks and rewards, making effective risk management crucial in CFD trading.

9. What are the advantages of trading share CFDs?

Trading share CFDs (Contracts for Difference) offers several potential advantages. It allows traders to speculate on stock price movements without owning the underlying shares, providing flexibility and ease of access. CFDs often enable trading on margin, meaning you can control a larger position with a smaller initial investment.

This can amplify potential profits, although it also increases risk. CFDs offer the ability to go long or short, allowing traders to potentially profit from both rising and falling markets. Additionally, many CFD brokers provide access to a wide range of global markets, enhancing trading opportunities.

10. What is the cost of trading share CFDs?

The costs of trading share CFDs include an overnight swap (when open position is held overnight), conversion fee (when deposit currency is other than USD, which is charged for holding positions overnight, reflecting the cost of leverage) and the spread—the difference between the bid price (purchase price) and the offer price at the time you trade.

When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.