CFDs vs Traditional Trading: The Showdown You Didn’t Know You Needed
Choosing between Contracts for Difference (CFDs) and traditional trading can feel like navigating two very different universes. While both approaches offer opportunities to profit, they operate on fundamentally distinct principles, carry different risks, and suit different types of traders.
Understanding these nuances is key to making informed decisions that align with your financial goals and risk tolerance.
Understanding the Basics
Traditional trading revolves around buying and selling physical shares on established stock exchanges. When you purchase a stock, you become a part-owner of that company. This ownership comes with rights, such as voting on corporate decisions and receiving dividends. Traditional trading often appeals to long-term investors who prioritise stability and value creation over rapid gains.
CFD trading, on the other hand, is fundamentally different. A Contract for Difference is a derivative that allows you to speculate on the price movements of an asset without owning it. You can take a … Read more