CFD Stock Alerts versus Stocks Day Trading

CFD Stock trading is somewhat similar to that with trading shares. However, there is an exception, when you involve yourself in trading a Contract for Difference, you really don’t get the ownership of the underlying share. Trading shares and CFD stock alerts are both known to offer immense earning opportunities. There is a lingering question in mind of many people on which one is better and what the best instrument to trade is. The answer is simple it depends what the trader wants to attain. Let’s take a closer look at CFD versus Stocks and weigh the advantages and disadvantages offered by each of them.

You need to have all the money if you want to buy stock. You can use margin loans for your benefit but you still need to have cash equivalent to 30-40% value of underlying stock. In CFDs, the amount of cash required comes down to as low as 3% if you are dealing for stocks. If you are trading currencies, the requirement is lower than what is required in dealing CFDs for stocks.

The profit potential in trading CFDs is huge (10 to 20 times) due to leverage as compared to stock trading. Thus, in this case, CFD wins easily when compared with Stock trading.

One CFD is equal to one share, the only difference in CFD trade is you have contract for difference position with your provider and you only need to put forth 5% to 20% of the actual contract value in order to trade CFD.

CFDs trading are quite profitable in terms of execution, cost and versatility. The costs are transparent and there is no stamp duty or expiry period involved. CFD stock trading also gives you option of short selling or long-term investment. All you have to do is use only those products, which limit your downside and position trade sensibly in market. You can go short to gain advantage of overvalued stock. You can gain benefit from fall in share prices at no extra costs.

When you hold a CFD position prior ex-dividend date, you receive dividend in your account on the same day. You can start your CFD trading for $5000 or less. The major difference between CFD Stock trading is you get the benefits of the ownership rights that include voting rights in the shares. In CFD, you also get the right to acquire the referenced shares. Thus, in CFD you are only keen in the economic aspects of the shares and not in the ownership of the shares as is the case in share trading.

Let us take an example here; if you purchase 500 AAPL stocks at a price of $130, the amount you will have to pay to buy these stocks will be $65, 000 if you carry out the deal with a normal stockbroker. If you then sell these stocks of Apple at a price of $134 then you will get a return at the rate of 3.1%, which will be equal to $2000. However, with CFDs you can buy as many as 500 contracts of AAPL with a 10% margin simply for $6500. If the price of the stock goes up and you are able to sell it at $134 then you make a profit of $2000 but with a return of a mammoth 30.8%.