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What is CFD stock trading?

When you trade CFDs, you are not buying or selling the underlying asset (for example a physical share, gold bar, diamond, currency pair, etc), Instead you are buying or selling a chosen number of units for a particular financial instrument to speculate on the price, depending on whether you think prices will go up or down. For example, if you think the price of a particular stock CFD may increase, then you may consider buying units in that stocks CFD. For every point that the price of the instrument moves in your favour, you will make a gain. For every point the price moves against you, you will make a loss. You can choose to set an upper or lower price level (stop loss & take profit) in which to close the CFD trade or exit manually. Amongst the benefits of online stock CFD trading are that brokerages will offer leveraged trading and you can go short (sell) if you think prices will go down or go long (buy) if you think prices will rise. Overall, CFD stock trading is much more accessible to anyone who has a trading account with an online stock broker. You can read in more detail about CFD trading on our best CFD brokers page.

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