Stock trading with CFDs

Thanks to CFDs (Contract for Difference) you can trade in stocks with a limited investment. You can speculate on rising prices, but you can also speculate on falling prices (short positions). This can be done, among others, on the Plus500 or IG platform.

The advantages of CFD trading

• Potential large profits with a limited investment, thanks to the leverage effect
• Making money by speculating on rising and falling markets
• You choose your own stop-loss and the risk you want to take
• You can never lose more than the deposit on your account (for Plus500)
• No transaction costs: the broker makes money on the spread between the bid and ask

Practical example on the Plus500 Web platform: short Barclays

If you think that the price of Barclays is going to fall, then you can sell short the shares by clicking on the "Short" button.

You want to short sell 5000 shares at 165.50. The total exposure amounts to 8,275 pounds, but you only need a margin of 828 pounds to open this position. You choose a stoploss at 175: should Barclays rise above 175 you would make a loss of 612.59 euros. You can also choose a profit target, for example 140 pounds, which would mean a profit of 1,644.31 euros.

Long trade on Tesla

If you think that the price of Tesla is going up, then you can open a long position by clicking on the "Buy" button.

You want to buy 20 shares at 207.88. The total exposure amounts to 4,158 dollars, but you only need a margin of 416 dollars to open this position. You choose a stoploss at 190: should Tesla fall below 190 you would make a loss of 320.34 euros. You can also choose a profit target, for example 250 dollars, which would mean a profit of 754.64 euros.

Open an account

Compare the CFD platforms and try the free demos or open an account right away. With an account you can also trade CFDs for raw materials (oil, gold, silver, platinum, etc.) and on the Forex market (currencies). With the free demo you can practice with a fictitious capital so that you learn how to trade with CFDs and familiarize yourself with the bidder's platform.