- Go Short or Long - With CFDs you can trade each way allowing you to profit both from rising and falling markets
- Hedging Your portfolio - If you believe your share portfolio may lose value you can use CFDs to offset this risk by short selling against it. This is especially useful in volatile markets.
- High Leverage - Unlike traditional share trading you do not need to tie up the whole value of your trade. Leveraged trading allows you to magnify your gains whilst only depositing a fraction of the whole trade value.
- Offset your losses against Capital Gains Tax - In the UK CFD losses can be used to offset any taxable capital gains in that financial year.
- Wide Range of Markets Available – Many brokers allow you to trade CFDs on a wide range of markets and normally on many global stock exchanges as well as currencies, indices and commodities. Opening up even more ways to invest your money.
- No Stamp Duty - As you never own the underlying instrument you place a CFD trade on there is no stamp duty to pay unlike traditional share trading. In the UK, there is no stamp duty payable on CFD trades, however check the tax rules of your particular home country.
Contracts For Difference (CFDs)