With a CFD, you receive many of the benefits of share ownership (such as dividends and price performance) but you don’t actually own the share. A CFD is a derivative product.

CFDs are a margined product. You only deposit a fraction of the overall value of the trade (typically 10%), allowing you to make a much larger potential investment than if you were buying the shares. So for example, £1,000 would be needed to buy a CFD in £10,000 of shares. A £500 profit on the deal would equate to just a 5% return if you bought the shares outright; compare this to a return of 50% with a CFD. However, losses are magnified in exactly the same way.

In addition to the initial margin required to establish a position, if your position moves against you, you may need to make further deposits. This is because you must meet the full value of running losses as well as maintaining the initial margin. By using margin you are effectively borrowing money to trade, and as a result you are charged financing for your positions.

We offer a comprehensive range of CFDs on individual shares across share based indices, commodities and currencies. The prices are quoted as in the underlying market, for example in UK in sterling.

How do you tell whether it is right for you?

• What is your attitude towards risk?
  If you’re usually made wary by the phrase “investments can go down as well as up” then CFD trading is probably not for you. If you’re comfortable with high risk investments and have the money to trade with, CFD trading could be an ideal way to trade.
• Do you have the financial reserves?
  Everyone wants to make money and with CFD trading, the potential profits can be considerable. But so can the losses. Markets are volatile and can turn against you very quickly, leaving you highly exposed. If you don’t have the money to lose, don’t trade. Sensible traders always make sure they only risk what they can afford to lose.
• What's your experience of the markets?
  It is important that you understand the dynamics of any instruments you trade via spread betting or CFD trading, some markets move more quickly than others and so profits or losses can accumulate more quickly. Also remember that when trading on lower margin products your total exposure can be much larger.