What are Stock CFDs?
CFD stands for Contract for Difference. A CFD is a financial instrument that gives traders exposure to price movements of an underlying asset (such as gold, bitcoin or shares), without the trader needing to hold the physical underlying asset.
CFDs are available for thousands of assets, covering commodities, cryptocurrencies, local and international stocks, ETFs and more.
Stock CFDs give traders exposure to the price of stocks without needing to hold stocks. For example, if you buy Apple Inc CFDs, you will profit if the price of the stock increases, or incur a loss if the price of stock decreases, without ever actually holding the stock.
Traders can buy and sell cryptocurrency CFDs from reputable CFD exchanges such as Plus500.
Plus500 offers CFDs for countless stocks from all over the world.
Advantages of Trading Stock CFDs
Easier access to international stock prices
Stock CFDs cover thousands of stocks from all over the world. On traditional stock exchanges, investing in international stocks requires additional administrative paper work, for example to declare your resident country for tax purposes.
Since CFDs do not involve physically handling the underlying asset, no such administrative work is required when trading in international stock CFDs. With CFD exchanges such as Plus500, you will have access to the full range of stocks (and other assets) once you've opened an account.
Short Selling Stocks
If you think the price of a stock will fall, you can benefit from this by short selling the stocks's CFD.
Disadvantages of Trading Stock CFDs
Since stock CFDs do not handle the physical underlying stock, you will not get company voting rights when you buy a stock CFD.
For active short-term traders, this is usually not an issue.
On the otherhand, you will still be compensated for any dividend payments and stock-splits when you hold stock CFDs.
CFDs are also mostly suitable for short term trading rather than long term investments.
Trade Stock CFDs
Practice trading with free virtual cash on a Plus500 demo account