A CFD is a product that gives investors a number of benefits over traditional share dealing. Specifically the advantages include:
1. Lower commission rates (for advisory dealing)
2. Ability to gain exposure to a higher amount of shares using a small deposit
3. Ability to make money in a falling market (shorting)
4. No stamp duty on purchases
However one if its main advantages (leverage) is also the reason why it is a higher risk product. In other words, an investor’s profits and losses are multiplied.
As part of a balanced portfolio and if you are looking for an element of speculation, CFDs could be for you provided that you are sensible in your strategy and you are only using funds that you can genuinely put at risk.
If you have never traded CFDs before then it’s important that you understand how they work and the greater risks associated. That’s why at London Stone we offer free demo trading accounts so you can better understand the product. We also have a number of documents and worked examples so you can see how this product works in practice.
CFDs are particularly suited for those who are looking for short-term capital appreciation.
Please download the Key Information Document (KID) for CFD Stock and Indices pdf.
Risk Warning - All investments carry risk and prices may change quickly. The value of your portfolio can go down as well as up. Past performance will not necessarily be repeated and is no guarantee of future success. You should carefully consider in light of your financial resources whether investing in stocks and shares is suitable for you. This notice cannot disclose all of the risks and other significant aspects of investing in equities, derivatives, bonds or any other investment product. A full list of risks will be provided for the products which you are interested in. For more information please contact one of our team.