What separates CFD trading from share trading? Well, for one, the CFD trader does not have any shareholder rights. There are no voting rights. You can’t attend annual general meetings. When you trade CFDs with one broker, it has to be closed with the same broker. Furthermore, CFDs are traded on margin and you will pay interest to carry a position from one trading day to the next. If you’re going short on CFD, you will receive interest except if it carries a negative interest.
Short positions on CFDs will require you to pay the dividend but if you have a long position in a CFD, you will receive the dividend.
The essence of CFD trading are as follows:
• When you are CFD trading you are trading at the underlying market prices
• When you’re trading CFDs you will pay to enter and exit the market via commission.
• And finally you also have the ability to trade the market not only from the long side but also from the short side, capitalizing from falling prices.
When we’re talking about leverage, we’re really talking about margin. And margin is low. It could be 10% or less. And CFDs are available on stocks, on stock indices as well as on commodities.