How to trade Nvidia shares with CFD?

Investors who want to buy Nvidia stock should follow a few steps before hitting the button. Here is how to buy Nvidia shares (NVDA) either as a short-term active trader or long-term investor.

What are Nvidia shares?

Founded in 1993, NVIDIA is a leading designer and manufacturer of computer graphics processors, chipsets, and related multimedia software. The company is dedicated to accelerating digital experiences and addressing global challenges in visual computing.

NVIDIA has pioneered the shift toward accelerated and graphics-based computing, believing it can tackle issues that traditional retail-focused computing manufacturers cannot solve. As video games gained popularity, the founders recognized this as an opportunity, prompting a strategic pivot to the gaming sector. This move aimed to tap into large markets and generate sufficient revenue to fund research and development initiatives focused on solving significant global computing challenges.

Nvidia shares represent a unit of ownership in Nvidia Corporation – and they are among the world’s most popular financial instruments. Nvidia shares will rise and fall in value according to how well the company is performing at a given moment in time. Better-than-expected Nvidia earnings will make the share prices rise, while weaker earnings will make share prices fall. However, there are many reasons why a company's share price can change.

People trade Nvidia stocks because, just like other financial instruments, they can be an opportunity to invest money. At a basic level, you can take a position on Nvidia shares to get exposure to economic growth. If an economy is in good shape, you might find that companies operating in that specific economic branch or industry will grow too.

Trading Nvidia CFDs

Rather than investing in the shares, traders speculate on the shares’ value. They can speculate on it rising by going long, as well as falling by going short.

Trading Nvidia stock means that you are speculating on a share’s price movements with derivatives like CFDs. In other words, you are purchasing Nvidia shares without taking direct ownership.

Leverage is available when you use this product, giving you full market exposure for an initial deposit – known as margin – to open your position.

For example, a trader who wanted to buy 100 NVIDIA CFDs at $227 per share would only require $4,540 of trading capital, thereby leaving the remaining $18,160 available for additional trades, based on our 1:5 leverage for CFDs on NVIDIA shares.

But keep in mind that leverage can increase both your potential profits and your losses as they will be based on the full exposure of the trade, not just the margin requirement needed to open it. This means losses, as well as profits, could far exceed your margin.

Nvidia's Stock Performance Dominates The S&P 500 In 2024

Nvidia’s meteoric rise has become a double-edged sword for the broader market. The company, along with Microsoft and Apple, holds nearly 20% of the S&P 500's weight. However, Nvidia’s stock has outperformed its tech brethren in 2024. Market dynamics hinge on Nvidia's performance; a significant decline in its stock could potentially ripple through and negatively impact broader markets. Increasing volumes of Nvidia stock options amplify its stock swings, demonstrating powerful 'short gamma' effects where buying call options drives the stock higher.

Nvidia's impact on the market is not unprecedented; Tesla experienced a similar influence in recent years, primarily driven by significant options market activity. However, Nvidia's power is amplified by the extensive and transformative role of AI across multiple industries, giving it a greater influence than Tesla had with electric vehicles.

Investors are cautious about a select group of stocks, including Nvidia, Microsoft, and Apple, that are pivotal in driving market momentum. A representative from Susquehanna Financial Group remarked that Nvidia's performance has the potential to sway the entire market. Conversely, any decline in Nvidia due to reduced product demand could have adverse effects on broader markets, highlighting the tech sector's substantial role in shaping current market dynamics.

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.Trading cryptocurrency CFDs and spreadbets is restricted for all UK retail clients