Stock CFDs: Trading Shares With Leverage
Stock CFDs let you trade individual company shares without owning them. Learn how they work and when to use them. Trade company shares with leverage — hours.
What Are Stock CFDs?
Stock CFDs allow you to speculate on individual company share prices without owning the stock. You get price exposure without custody, can use leverage (typically 5:1), and can go short easily.
Pros vs Share Trading
- Leverage: 5:1 leverage vs no leverage with standard share trading
- Short selling: Easy to short — no borrowing required
- No custody fees: No stockbroker account or custody charges
- Smaller capital: Access expensive shares (Amazon at $3,000) with $600 margin
Cons vs Share Trading
- No ownership: No dividends, no voting rights
- Overnight fees: Daily financing charges make long holds expensive
- Limited selection: CFD brokers offer 100-1,000 stocks vs 10,000+ at stockbrokers
- Wider spreads: Stock CFD spreads are wider than exchange spreads
Best Use Case
Stock CFDs are best for short-term trading (days to weeks) where you want leverage or to go short. For long-term investing, buy the actual shares — no financing costs and you collect dividends.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70-80% of retail investor accounts lose money when trading CFDs. Backtesting does not guarantee future results. Always consider whether you can afford the potential loss of your capital.