Stock Trading via CFD

With Finotec, you can trade CFDs on the most widely traded stocks in five of the world's largest stock markets. Trade CFDs on over 70 stocks and with some of the lowest margin requirements available on the stock market. Online Stock trading via CFD instruments is becoming increasingly popular with traders who wish to diversify their portfolio. One of their main appeals of trading CFD on stock is that it allows for leverage trading and thus higher returns on investment. CFD's are a good way to trade stocks using margin. Another great advantage that comes with share CFD contracts is that they allow you to short sell and benefit from falling stocks.

What is a CFD?

A CFD, short for "contract for differences," is a derivative that enables traders to speculate on the price direction of underlying shares or other instruments such as commodities or stock indexes. When you trade CFD on stocks, you don't actually own the underlying share, you speculate on the future direction of its price.

As margin products, CFD's on stocks allow traders to buy and sell contracts using leverage (the ratio that we offer between the collateral needed for the trade and the deal size). Stock trading with margin means that you need to the total amount size of the deal to open a large position; you just need a certain percentage of it. At Finotec, when trading shares with margin, you benefit from some of the lowest margin requirements available on the market. Trade stocks with a margin as low as 10% (10:1 leverage) depending on the stocks you wish to trade. This means that to open a $100,000 position on a particular stock, you only need $10,000. Please note that while margin trading allows for substantial profit, it can also lead to significant loss.

Stock Trading via CFD can be described as opening a position on credit proceeds. When you buy stock CFDs, you are entitled to all the benefits of the underlying stock - that includes dividends and price rise - and pay off on-credit expenses to the writer (seller). In a way, it's like taking a bank credit: you borrow capital to buy shares and receive the benefits a shareholder would get, and pay the interest. However, the dividends you receive when trading CFD work in a different way than with proper shareholders. What you receive is more of a "dividend adjustment."

Example: A short CFD position on stock ABC

• A trader decides on a bearish transaction on the stock ABC (he expects the stock to fall over the short term)
• He sells 500 shares ABC at $8.40 via CFD contracts.
• As expected, the stock declines and he buys backs the shares to cover the trade three weeks later at $7.70

SHORT CFD POSITION - (Bearish Trade)
Sell short 500 ABC shares via CFDs at $8.40	$4,200
Margin deposit: 10% of the transaction	$420
NO COMMISSION!	$0.00!
Closing position: buy back 1,000 ABC at $7.70	$3,850
NET PROFIT ($4,200 - $3,850)	$350

Short selling

This is one of the main appeals of stock trading via CFD. On the Finotec Trading Platform, it is as easy and cost-effective to sell short than to buy stock. Short selling CFD on stocks allows you to profit from falling stocks, something that is impossible when you deal with the actual stock. When you invest on an index via a CFD on the Finotec Trading Platform, you can open a short position instantly at the live trade price.

Start Trading CFDs on Stocks with Finotec

With Finotec, you can trade some of the world’s most popular stocks via CFDs. Whether you have a Standard Account or a Mini Account, you may choose from 90+ stock products trading on the world’s main exchanges. Buy and sell shares of Europe’s and America’s top publicly traded companies with great leverage opportunities. All you have to do is choose the stock you want to buy or sell by clicking on the platform’s "Equity" menu. There, you will select the country where the stock is traded and then the stock itself. Select the amount of stock you wish to trade CFD's on. If you choose so, you may also set a take profit level and a stop loss when you place your order. There is no commission when trading CFDs on stocks at Finotec.

Trading share CFDs with Finotec is simple. In two clicks you can buy or sell CFDs on stocks. To help you make wise decisions, you can view live charts on all past stock price fluctuations and add technical indicators to try and predict future price movements. On top of that, you have the option to receive price alerts via SMS, email or phone to stay updated wherever you are. If you have any questions, the Finotec support team will be happy to help: our traders are always available for advice.

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Stocks trading with Finotec. A company’s stock price is falling? "Go short"

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