A contract for difference (CFD) is a leveraged financial product that allows traders to speculate on an asset class without actually owning the underlying asset.
It is very important to highlight that CFD trading is not investing. It is very high risk speculation and it is possible to lose all your money fairly quickly.
Likewise, if you call the market correctly you can make a greater return on your money than by investing in fully paid up physical stock.
CFD trading also has the advantage of not being liable for stamp duty which is currently at 0.5% of the value of a trade.
Many short term speculators prefer CFDs to physical stock buying as the costs are lower, but if a CFD trader is using leverage then the risks are higher.
Where to find a CFD trading broker?
Use our comparison tables to compare CFD trading brokers. The key things to look at are costs, margin and the CFD trading platform. You can use the table to view the CFD broker websites and open demo accounts.
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