Trading shares as CFDs is gathering popularity, by allowing more people access to the advantages of stock investments with a DIY approach. What was once an ‘elitist’ club, is now open and accessible to anyone who wants a piece of the action.
When you trade shares in the form of CFDs, you encounter 3 major benefits:
- Leverage: Instead of using your money with 1:1 ratio, CFD trading allows you to use the same amount of money and trade more shares. For example: A leverage of 40:1 will allow you to multiply your investment by 40, so you can buy (or sell) more share CFDs. True, this also multiplies your risk, when a small market movement can have a major effect on your deal and erase all of your invested sum, but then again, for that same risk you can trade in volumes only bankers and corporations can.
- Short trading: like many other CFD instruments, trading shares in this method allows you to trade ‘against the share’ in a way, so you can benefit if you think the price will go down from where it’s at now. So when all traditional traders grab their head when the market is plummeting, you can be smiling as you’ll be closing a successful deal.
- Variety: Use the same ‘wallet’ or balance to trade share CFDs from many industries, and add names Google, Facebook, Tesla and Coca-Cola to your portfolio, without allocating separated investments and paying extra fees. From the same account balance you can open multiple deals on as many share CFDs you wish to, and balance your risk by exposing yourself to one company’s failure and another’s success.
How to decide which shares to trade
We can’t tell you which share to start with, as there isn’t one, clear answer. It depends completely on your own preferences, and what shares they you well or can easily obtain information about. To read more about how you can start trading shares online with a dedicated educational program, read our full article here.