Share CFDs vs Share trading: What is the difference?

Take a deep dive into the advantages of trading share CFDs over traditional share trading.

What's the difference between share CFDs and share trading?

While share CFDs and share trading both allow you to profit from the fluctuations of stock prices, share CFDs offer some benefits that traditional share trading does not.

Since share CFDs are derived from price movements of shares, rather than ownership, you have the flexibility to speculate whether the price is going up or down. Combined with the ability to leverage trades, it means you only need to put up a small percentage of the full value of a trade in order to open the position. Conversely, investing directly in traditional stocks often requires a lot of capital. But because share CFDs still mirror all the rights of the underlying share, you are eligible to receive cash dividends.

Why trade share CFDs over buying shares?

There are many benefits of trading share CFDs over traditional share trading. Here are the three main reasons:

Leverage

Leverage

Share CFDs allow you to utilise leverage when trading the movement of stock prices, meaning you can make higher profits with a smaller amount of capital. While this can increase returns, it also increases risk.

Trade both directions

Trade both directions

Trading share CFDs allows flexibility; you can go long (buy) when you expect prices to go up or go short (sell) in order to profit from falling stock prices.

Commission-free

Commission-free

Axi doesn’t charge commission on share CFD trading. This allows you to trade shares without worrying about the minimum charges carried by most other brokers.

Share CFDs vs Share trading features

How to trade share CFDs with Axi?

Follow our step by step guide to open a share CFD trade.

  1. Register a live trading account with Axi
  2. Add funds by depositing into your account
  3. Download the MT4 trading platform and log in
  4. Monitor the market and choose the share CFD you want to trade

Open Account

Example of a share CFD trade

Let's look at two different examples of trading shares, using traditional share trading and share CFD trading on Tesla stock.

Example of investing in Tesla shares using share trading and share CFDs

It’s important to note that whilst margin trading can amplify returns, it can also amplify losses if the markets go against you.

What fees are included when trading share CFDs?

Axi charges no commission on Share CFD trades.

Please note that there may be fees for holding positions overnight. Overnight holding rates for share CFDs are based on the underlying interbank rate for the currency of the relevant share, plus 2.5% on buy positions and minus 2.5% on sell positions (exceptions may apply).

For more details on fees, including trading hours, please refer to our Product Schedule.

Discover more markets to trade with Axi

Choose from a variety of global markets to trade with Axi, using ultra competitive spreads & flexible leverage to trade your edge.

Share CFDs vs Share trading FAQs

CFD trading allows you to trade using leverage which means you are able to speculate on the movement of stock prices with a smaller amount of capital than would normally be required to buy and take ownership of a physical share.

Yes, you can use share CFDs to hedge your existing share portfolio. This is because share CFDs prices essentially mirror the actual performance of the underlying stock.

As you don’t own the underlying stock when you trade share CFDs, payments are settled immediately.

Axi offers over 50 share CFDs, including many of the most popular companies across US, UK and European markets. For more details, please refer to our product schedule.

All trading carries an inherent risk, and share CFDs are no exception. Since CFDs are a leveraged product, both gains and losses can be amplified. This should be taken into consideration when you are deciding on your trading strategy and approach to risk management.

Follow the steps below to find all our share CFDs in Metatrader 4 on desktop:

  1. Once you've logged into MT4, click Ctrl+M to open the “Market Watch” panel
  2. Right-click and select either “Show All” or “Symbols” to view all the available symbols to trade
  3. Locate the “Stocks” group and double-click to make your chosen stock symbol appear in the Market Watch window
  4. Once you have selected a symbol, right-click on it and select “Chart Window” to open that Stock CFD’s chart
  5. To place a trade, right-click anywhere on the chart, then click “Trading” and select your Order Type

Trade share CFDs online with Axi

Sign up for a live trading account or try a free demo trading account to experience a real trading environment.

Open Account