Why Trade CFDs?
CFD trading benefits
CFD trading gives you the power to trade against share price movements without actually buying or selling the physical shares. CFDs are quick and accessible, removing the need to trade through a stockbroker. And selling shares is easy, so you can use CFDs to make a profit when markets are falling.
Because you are trading on margin, CFDs can enhance the risk/return on your investment capital. This means that, when you trade CFDs, you don’t have to put up the full value of the shares you are trading. Instead you pay a deposit or margin to cover any potential loss on the position (although you may lose more than your initial deposit). This is typically a fraction of the full contract value. More on CFD benefits and risks.
CFDs on equities
A CFD contract replicates as closely as possible the equivalent share transaction. Unlike financial spread betting, you are not betting per point movement of the share price. Rather, you buy or sell a quantity of CFDs, equivalent to a number of shares (although no physical share transaction actually takes place).
To trade equity CFDs with InterTrader you simply buy or sell at the live market price and pay a small commission on opening and closing your position (for US equities this charge is incorporated in the spread). Find out more about CFD Trading Costs.
With InterTrader you get all the advantages of online trading via our web-based platform or mobile apps. You can enjoy fast dealing wherever you are over a wide range of markets, with 100% market-neutral execution. You are in control of your trading, not the broker.
Going short of equities is also typically quite complicated with a traditional broker. Not so with CFDs. You simply open your CFD contract to go short rather than long. This gives you the ability quickly to set up hedging transactions as required.
CFDs on other markets
CFDs are not used solely for equity trading. At InterTrader we offer CFDs on stock indices, forex, energy contracts, metals and other commodities, all via one online trading platform. You can also trade forex and a selection of indices and commodities on the popular MT4 download platform.
When you trade CFDs on non-equity markets you buy or sell a certain number of contracts, where each contract represents a given risk/return on the underlying market. For instance, one contract of our Germany 30 represents a risk/return of €1 per point movement in the underlying market. So if you sell three contracts of Germany 30 you will make €3 for every point the the index falls below your bid price and lose €3 for every point the the index rises above your bid price.
You decide how long the contract will stay open. There is no fixed expiry date (unless you trade a futures contract with an expiry date). You simply close the contract when you are ready, at which point the difference between the opening price and the closing price is calculated and your profit or loss is realised.
InterTrader helps to reduce the cost of your CFD trading. With our TradeBack loyalty scheme (available to professional clients only) you can receive a monthly rebate of up to 10% on your spread fees, if you have traded over a certain amount during that period. This applies to all CFD trades on non-equity markets, regardless of whether your trades have made or lost money.
Your loyalty rebate is calculated on our spread on opening trades only. The rebate calculation differs for CFD trading and spread betting, and excludes opening trades on equities.
For more on the mechanics of CFD trading, see CFDs in Detail. There are several other ways to build your understanding of CFDs: