A comparison of a CFD and a share trade

The major difference between CFD and shares is that CFD’s are bought using leverage.

This means that you can gain a larger exposure to the movement of the share for a relatively small outlay.

Keep in mind however, that leverage will magnify a profit, or a loss, so it does carry significant risk.

	CFDs	Shares
10,000 shares buy at $3.00	$30,000	$30,000
Initial outlay required	$300	$30,000
10,000 shares sold at $3.20	$32,000	$32,000
Gross Profit/Loss:	$ 2,000	$ 2,000
Return on Investment	666%	6.66%

Note: To simplify the scenario we have not included any fees, interest or dividend adjustments. These will vary between providers.