Why trade cfds

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. When you trade CFDs, you can take advantage of prices moving up or down in value by taking either a short sell or long buy position. This means you have the potential to benefit from both rising and falling markets. One of the main advantages of trading CFDs is the fact you are trading on margin.

Trading on margin can potentially maximise profits, but has the potential to magnify losses. This means that you could lose your entire investment if the trade goes against you, if you are a Retail Client. Professional clients can lose more than their deposits and they may be required to deposit additional funds to cover their losses. Traders often diversify and hedge their portfolio with CFDs, especially in volatile markets.

The wide range of markets available to trade with CFDs from just one trading account is another key advantage. However, tax laws are subject to change and depend on your individual circumstances.

Tax laws may differ in a jurisdiction other than the UK. The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money.

IG International Limited is licensed to conduct investment business and digital asset business by the Bermuda Monetary Authority. IG provides an execution-only service. The information in this site does not contain and should not be construed as containing investment advice or an investment recommendation, or an offer of or solicitation for transaction in any financial instrument.

IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. The information on this site is not directed at residents of the United States and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

Careers IG Group. Inbox Community Academy Help. Log in Create live account. Related search: Market Data. Market Data Type of market. Charges and margins Volume-based rebates CFD account details. Benefits of CFD trading When you buy or sell a contract for difference CFD you are agreeing to exchange the difference in price of an asset from the point at which your position is opened to when it is closed.

Find out more. Practise on a demo. Why trade CFDs? Learn how to trade CFDs. Going short Because a CFD trade consists of an agreement to exchange the difference between the opening and closing price of your position, it is more flexible than other forms of trading. Trade a huge range of markets You can use contracts for difference to trade over 17, markets, including shares, indices, commodities, forex, cryptocurrencies, options and more. Similarity to the underlying market CFDs are designed to mimic the trading environment of their underlying market fairly closely.

CFD trading has both advantages and disadvantages when compared to regular share trading. Both ways of trading provide options to take advantage of price movements in financial markets.

You need to understand your trading objectives and the kind of trading that best suits you and decide which way to go. Plus uses cookies to improve your browsing experience. You can click accept or continue browsing to consent to cookies usage. Read our Cookie Policy to learn more.

Back to Shares. Choose Article. What Are Shares? Previous Article. Next Article.