One of the biggest advantages is that CFDs allow you to benefit from both an upwards or a downwards price movement. You can also use what is called “margin” or “leverage” when trading CFDs. Leverage is, in general, a powerful and useful feature of CFD trading. It provides the opportunity to take significant positions (trades) without investing an equally significant amount of capital. However, leverage can be a double-edged sword since large price swings on accounts with higher leverage can increase the chances of a loss.

There are also certain tools that are exclusively available when trading CFD Shares:

• Guaranteed Stop Loss with No Slippage: This protects your account against runaway losses with a premium add-on that ensures No Slippage at your desired stop loss rate. Activate with wider spread for total risk control.
• Margin Trading: As mentioned above, CFDs give you the option to open a bigger trade with a smaller investment. Again, it is necessary to mention that although beneficial, smaller movements can cause a trade to lose and close more rapidly.

Note: The Stop-Loss tools on our MT4 platform do not offer guaranteed execution. We only offer Guaranteed Stop Loss with No Slippage as a premium add-on on our easyMarkets platform and app.

In simple terms stocks (or shares) give partial ownership of the company that issues them to shareholders in exchange for funds. Shareholders receive part of the company’s profits or a portion of its appreciation when they hold a company’s stock. Depending on the type of shares issued, having shares in a company can even give voting rights.

Depending on what the company needs, they issue different types of shares:

• Ordinary shares: These are the standard shares, without any special permissions or obligations. Companies may even issue ordinary shares of different value, with the number of votes being dependent on the value of shares the individual holds.
• Non-voting ordinary shares: These are conditional shares that allow voting only when certain requirements are met.
• Redeemable Shares: This gives the company the option to buy back its shares at a future. There may be a predefined timeframe for the buy-back or not.
• Preference Shares: the “Rolls Royce” of shares – these types of shares not only receive a fixed dividend amount every year, but they also receive it before other shareholders.

Although there are many other types of shares that companies’ issue, these are the most common. There is a caveat though, although shares can pay dividends, if the issuing company goes under – their shares might not be worth anything.

Luckily this isn’t a risk when you trade CFDs because you don’t actually own the underlying asset. Another benefit of trading CFD Shares is that you can take advantage of both positive and negative price trends. When you own the actual asset the only way to benefit from it is by an increase in its value.

Issuing shares creates capital for a company – but unlike loans, technically that capital doesn’t have to be paid back (at least in a traditional sense). The agreement instead is capital for a share of the company’s growth, profits and decision-making (if the shares are of a certain type).

Shares are sold on the stock market – and they are sold for various reasons:

• To create capital (also known as equity financing)
• When the first investors of the company want to devest
• To give employees stock as incentives
• So investors can trade a company’s stock

A listing is when a company offers stocks on the stock market. This creates capital for the company, gives it creditability and promise of growth to the investors.

The simplicity may shock you – a company’s share’s price is determined by supply and demand. Of course, the way demand is created is through fundamental analysis, which is a little bit more complex.

• As we saw with Elon Musk, founder and CEO of electric car manufacturer Tesla, the actions of leadership can impact share pricing. Even when these actions aren’t directly associated with the company’s revenue creating activities.

A dividend adjustment will be made to the Client’s Balance with respect the underlying share’s positions held by the Client at the end of business day which precedes the ex-dividend date.

If a share goes ex-dividend, long positions will be credited and short positions will be debited with a cash adjustment for positions held in the share at rollover.

Dividends shall be credited or debited from the Client’s Balance outside the underlying share’s trading hours and before the opening of the share’s next trading day.

Dividends Formula

The basic formula used is d = p x n

• d = dividend
• p = position
• n = dividend declared

Here’s the calculation we use for the dividend for shares: A client opens a Buy position on 10,000 share CFDs of Apple (APLUSD), with a dividend declared at 2p. The calculation is: d = 10,000 x 0.02 = $200 (credited). Another example we can look at is that a client opens a Sell position on 5,000 share CFDs of Adidas (ADSEUR), with a net dividend declared at 5p. The calculation is: d = 5,000 x 0.05 = €250 (debited).