Trading Shares as CFDs

How Share CFDs Work

A share CFD mirrors the price of a real stock listed on an exchange. If Apple shares are trading at $180 on NASDAQ, the Apple CFD will be priced at approximately the same level. When you buy a share CFD, you don't own the actual stock — but your profit and loss tracks its price movement exactly.

The main practical difference: with CFDs, you can trade on leverage (putting up a fraction of the total value) and you can go short just as easily as going long.

Advantages Over Traditional Share Dealing

Share CFDs offer several practical benefits. You can access global markets — US, UK, European, Asian stocks — through a single account. There's no stamp duty on UK share CFDs (since you don't own the underlying). You can short sell without borrowing shares. And leverage means a smaller capital outlay for the same market exposure.

For active traders who want flexibility and efficiency, CFDs on shares are a more practical vehicle than traditional share dealing for short-to-medium-term positions.

Key Considerations

Share CFDs come with overnight financing costs, which makes them less suitable for very long-term holdings. If you plan to hold a position for months, traditional share ownership may be more cost-effective. Share CFDs also carry leverage risk — a 5% drop on a 5:1 leveraged position costs you 25% of your margin.

Liquidity varies by stock. Large-cap shares (Apple, Tesla, BP, HSBC) have tight spreads and deep liquidity. Smaller companies may have wider spreads and less reliable fill prices.

Dividends and Corporate Actions

When you hold a share CFD long, you typically receive a dividend adjustment credited to your account on the ex-dividend date. If you're short, the same amount is debited. Stock splits, mergers, and other corporate actions are also reflected in your CFD position.