One of the drawbacks of CFD share trading is that it is less regulated than stock trading. This fact is not a deal-breaker because high-quality CFD brokers exist, and you can locate them if you know where to look.
First, you should always trade with regulated brokers. For example, TMGM carries four different accreditations: ASIC, FMA, VFSC & FSC.
Second, the broker should be transparent about costs. They should list information about commissions, fees, and bid/ask spreads.
Third, the broker should offer leverage. One of the main advantages of CFDs is that you can increase the size of your position by borrowing capital from the broker. When trading CFD shares, leverage ratios are typically lower than they are for forex CFDs. However, you should be able to find margins of 10:1 to 20:1. At TMGM, we offer 20:1 leverage for share trading (when you use the MT4 platform).
Fourth, the broker should offer shares from the world's most important financial markets. CFDs allow access to global markets, so you want a broker with blue-chip listings from Asia, the US, Australia, and other major world markets — like TMGM.
Other features are also important. For example, the top brokers offer demo accounts that you can use to learn the nuances of trading CFD shares and test new strategies before risking real money on them.
Frequently Ask Question
You can start CFD share trading by opening an account with us today. With TMGM, you can learn the nuances of CFDs with a demo account before you move to live trading.
When starting, you should select a platform and ensure you know how to place orders, read charts and indicators, and use risk management tools.
When starting, you should select a platform and ensure you know how to place orders, read charts and indicators, and use risk management tools.
When you start trading CFDs, you must meet your broker's minimum deposit requirements. At TMGM, you need $100 to open an account. The amount of capital will depend on your plans. If you are learning to trade, $100 is enough to start your career. However, you may need more if you would like to open larger positions and meet your broker's margin requirements.
When you trade with TMGM, you do not own shares. A contract for difference is a derivative that tracks the stock but does not give you any ownership rights. Unlike with options or futures, you do not have the right or obligation to buy or sell shares directly. CFDs merely track the underlying stock's price movements so that you can benefit from price movements without purchasing the shares.
There is no single correct answer to the CFD vs. share trading comparison. These instruments serve different purposes. Shares give you ownership of the asset, so you can enjoy benefits like dividends and long-term gains. CFDs do not have the same investing benefits, but they allow you to track the market with limited capital, so they are better for day trading and short-term strategies.
So, if you are an active trader with limited capital, CFDs are better than stocks for your goals.
So, if you are an active trader with limited capital, CFDs are better than stocks for your goals.