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CFD vs ETFs Differences and Similarities in ETF & CFD

CFDs and ETFs are both excellent investment options, though one might be the better choice for you. Continue reading our CFD vs ETF (Exchange Traded Fund) guide to see which instrument you should trade & why you should trade with CAPEX – The best online broker for beginners and experts alike.

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Roy Connor
Author:
Roy Connor
Last Updated on:
04/04/2025
Topic:
Trading
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Wide range of tradable assets

Diversifying your trades is a great way to decrease the risk of losing all of your money. With CAPEX, you can invest in over 5000 tradable instruments through CFDs.

We offer traders CFDs on stocks, Forex, indices, blends, bonds, mutual funds, ETFs, investment funds, crypto, commodities and other financial derivatives. You can diversify your trades and experience trading in numerous markets. So, sign up with us for free and trade in a wide range of markets with the lowest trading fees.

Smooth online broker

Nothing is worse than having to trade on a platform that’s more like a maze, where you spend more time figuring out how to trade rather than trading.

Luckily, here at CAPEX, both our trading platforms are easy to use and have a simple interface. Everything on our platform is neatly aligned and merely a click away, so you can enjoy trading with ease and convenience. To get a better idea of how our trading platform is before beginning your trading journey, you can register on our free demo trading account.

Whether you are a swing trading enthusiast or a professional institutional investor, our platform makes it easy for you to trade in multiple stocks and other instruments like leveraged ETFs. Everything is conveniently placed just a click away, so you can focus on making profitable trades rather than navigating a complex maze within the financial markets. To experience our platform’s ease of use, sign up for our CFD demo trading account.

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How do CFDs work? – Trader’s guide on CFDs

A CFD or contract for difference is a popular form of financial derivative. It’s a contract between two parties, where both parties speculate on an asset’s future price and agree to exchange the difference in the asset’s value after a specific time period. CFD traders do not buy and sell assets; instead, they bet on an asset’s price and buy or sell a contract accordingly.

Trading with leverage?

The best part about trading CFDs is that it is traded with leverage, so traders don’t need too much capital to begin their CFD trading journey. Instead, you can invest limited capital and obtain greater market exposure. Plus, CFDs can be traded on a wide range of financial instruments, including stocks, indices, ETFs, bonds, blends, Forex, and crypto. Take in mind that day trading with leverage also means a higher risk tolerance, so it’s essential to have a good understanding of how the CFDs work.

Trading CFDs with leverage provides traders with the ability to gain exposure to various asset classes and underlying markets, such as stocks, futures contracts, and stock indices.  At CAPEX, we allow traders to invest in over 5000 instruments through CFDs in the stock market. We also offer the opportunity to trade with leverage, as well as StoX, a product without leverage.

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Pros and cons of trading CFDs

Pros of trading CFDs

  • The opportunities with CFDs are endless because you can trade in a wide range of markets.
  • Trading with leverage offers more market exposure with lesser capital investments.
  • You don’t have to own an underlying asset to benefit from it.
  • CFDs are simple products – there’s not much that could confuse you.
  • If CFDs are traded on stocks, you might get dividends.
  • You can trade CFDs in rising and falling markets.

Cons of trading CFDs

  • CFDs are high-risk instruments, and a large chunk of CFD trades end up in loss due to their high-risk nature.
  • With CFDs, you don’t own the underlying assets.

Invest in Your Knowledge

The Best Way to Boost Your Trading Skills!

Investing in knowledge is invaluable, especially when it comes to your finances. Learning how to trade effectively can bring the greatest returns. At CAPEX, we provide access to the necessary resources, tools, and information to help traders make informed decisions and trade with confidence.

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INTRODUCTION TO FOREX

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How do ETFs work? Trader’s guide on ETFs

An ETF, short for exchange traded funds, is a type of fund that is traded through exchange platforms. The ETF provider designs and offers a fund based on an underlying asset/s that they own and then sells shares in that fund to traders.

What does it mean for traders?

Investors then become shareholders of the ETF, and based on the value of the ETFs underlying asset; they make or lose money. Exchange traded funds can be used to invest in a wide range of assets, including stocks, commodities, bonds and other underlying assets.

ETF trading is becoming increasingly popular as traders can easily trade ETFs on stock exchanges, making it a convenient way to invest. Broker benefits include lower fees and easier diversification. However, it’s important to note that ETF trading is different from trading CFDs, and traders should be aware of the differences before taking a CFD position.

Excellent customer support

Having available customer support is important, especially when you’re investing somewhere. Luckily, we at CAPEX offer traders customer support through live chat, phone, and email. Individual traders and institutional investors can reach out to us for queries and concerns seven days a week. Plus, to cater to our multilingual user base, we offer customer support in several languages. For an even more convenient option, you can hop on to our FAQs page, where we have answered several queries in an elaborate manner.

Pros and cons of trading ETFs

Pros of trading ETFs

  • ETFs are traded like stocks, so they’re easy to trade.
  • The trading fees for ETFs are lower compared to other instruments.
  • Exchange Traded Funds offer traders diversification.

Cons of trading ETFs

  • ETF trading might not offer enough exposure to mid and small-cap companies, which limit opportunities for investors in some sectors.
  • The dividend yields on ETFs are considerably lower when compared to stocks.
  • With ETFs, you don’t own the underlying assets.

 

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Trading with CAPEX.com

The great thing about CFD trading online is that you can do it anywhere there is a secure internet connection. Inevitably, this means that mobile trading has proven particularly popular as traders can conveniently open and close positions from their mobile or tablet as and when it suits them.
Discover the functionality to ...
Trade more than 5,000 instruments
Trade more than 5,000 instruments
Manage your investment horizon
Manage your investment horizon
Set take-profit or stop-loss limits
Set take-profit or stop-loss limits
Open short and long positions
Open short and long positions
No fees for opening and closing positions
No fees for opening and closing positions
Trade with and without leverage (StoX)
Trade with and without leverage (StoX)
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CFD vs ETFs differences and similarities

The primary similarities between CFDs and ETFs are that both instruments don’t involve complete ownership of the underlying asset that you’re investing in. Plus, both of these instruments are traded with leverage, which means investors can get greater market exposure with lower capital investment.

The differences between both instruments are that:

  • While you don’t own the underlying asset at all when trading CFDs, you do own a tiny part of listed stocks when you invest in ETFs.
  • While CFDs are more suitable for short-term investments and can be renewed when they’re about to expire, ETFs are treated more like long-term investments.
  •  While CFDs are riskier, they can offer higher potential returns. Whereas ETF trading is safer but usually offer smaller gains to investors.

Here at CAPEX, we have integrated several learning tools to reduce the risk that tags along with CFD trading. For instance, you can practice trading on our demo account without investing any capital, or you can even learn how to trade through our CAPEX Academy.

Learning tools

The secret to becoming an expert trader is focusing on ongoing learning. The more knowledge you have the better investments you can make. If you trade with us at CAPEX, you’ll get access to a number of tools – many of which are integrated into our trading platform. For instance, you can follow expert traders through a feature on our MetaTrader 5 (MT5) trading platform, or you can access CAPEX Academy, where we teach trading through video content.

CFD vs ETFs - Which instrument should you choose to trade?

While no trading instrument is better than the other, it all comes down to what you’re looking for as an investor or trader. For instance, if you’re hesitant to invest in a high-risk instrument and would rather invest in a less risky instrument that offers fewer trading opportunities, is a long term investment, and offers smaller gains, then you can invest in Exchange Traded Funds.

Similarly, if you’re looking for an instrument that is easy to trade, can be traded on a wide range of assets or securities, has lower trading fees, can be traded with leverage and doesn’t require a large investment to begin with – CFDs should be your go-to option.

Here at CAPEX, we offer traders an excellent CFD demo trading account where they can sign up for free and practice trading until they’re ready to invest. This shall also allow you to determine whether CFDs are the right instrument before you begin your trading journey.

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What to look for in the best CFD trading platform and how we offer it

There are several factors that determine whether a trading platform is worth signing up with or not. Being the best CFD trading platform out there, we’ll go over a few of these factors and shine a light on how we at CAPEX offer each of them.

User-friendliness

The last thing a trader needs is a platform that isn’t smooth and is complicated. Traders spend a good amount of time on their trading platforms, which is why it’s essential that the platform is highly intuitive, easy to use, and has a simple interface. At CAPEX, we offer traders two user-friendly trading platforms – CAPEX WebTrader & MetaTrader 5 (MT5). Both our platforms are easy on the eyes and designed to all traders.

Available customer support

Having queries when you begin your trading journey is completely normal; however, not having access to available customer support can ruin your trading experience. We at CAPEX offer customer support services through phone, live chat, and email. Our support team is on their toes seven days a week. Plus, if you have a query, we’d recommend that you check out our FAQs page for a quick fix, as we’ve answered commonly recurring questions in an elaborative manner.

Good range of trading options

The key to avoiding serious losses while trading is to diversify your trades. In order to diversify your trades, you need a broker that offers a good range of instruments or markets to trade-in. Here at CAPEX, we offer traders over 5000 instruments that can be invested in through CFDs. Whether you’re interested in the Forex market, stocks, or even crypto, funds and their underlying asset – you can invest with CAPEX. In fact, you can also invest in ETFs through CFDs through our trading platform.

Low trading fees

Trading with a low fee broker is a great way to avoid extra trading costs and keep most of your profits to yourself. CAPEX is known as an excellent broker with low commission, and has some of the lowest trading fees. Plus, we don’t have a deposit or withdrawal fee, nor do we have a minimum deposit amount. You can simply hop on to our trading platform and begin your trading journey with as much capital as you’d like.

Here at CAPEX, we also offer traders Islamic accounts, especially for our Muslim clients. If you’re looking to convert your regular trading account to swap-free accounts, you can request the customer support team or staff at CAPEX.

 

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Trade

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Sign up with CAPEX today – A step by step procedure

You can begin your trading journey by signing up with CAPEX within minutes. Here’s a step-by-step guide that you can follow:

  1. Hop on to the website and click on sign up and enter a few basic details, including your name and email address.
  2. Then click on sign up, and you’ll be redirected to our trading platform, where we’ll ask you to complete your registration process.
  3.  Enter a few more details, including your income and taxation information.
  4. Once you’ve entered your details, the final step is an assessment. This is designed to ensure you’re allowed to trade within your capacity and in accordance with your knowledge.

Once you’ve completed the assessment, your account should be verified shortly, and you can begin your trading journey. Though we do recommend, traders try out our CFD demo account, so they can get a better idea of how CFD trading works, what risks are involved and also practice CFD trading before investing in it.

Final thoughts – Trade CFDs on ETFs with CAPEX

Every financial instrument comes with its own set of pros and cons, so there’s no such thing as ‘the better instrument’. However, one instrument could be better than the other for you based on what your trading priorities are.

ETFs (Exchange Traded Funds) are less risky but offer lower returns, so they might be suitable for traders who like to play it safe. On the other hand, CFDs are a great option for traders that want to invest with limited capital, don’t want to obtain ownership of an underlying asset while investing, and would like to diversify their trades.

If you’re still confused, we’d recommend that you sign up on our CFD demo trading account and experience CFD trading without risking your capital. Not only will you enjoy trading on a smooth and fast platform, but you might end up learning trading tips and strategies as well.

CFD vs ETFs – FAQ

What is the difference between CFDs and ETFs?
Can I trade both CFDs on ETFs with CAPEX?
Should I buy ETF or CFD?
Is S&P 500 an ETF or CFD?
Is trading with leverage suitable for traders?
Can CFDs make you rich?
Can I lose more money than I invest in CFDs?
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HIGH RISK INVESTMENT WARNING: Trading CFDs is highly speculative, involves significant risk of loss and is not suitable for all investors. Before trading, you are strongly advised to read and ensure that you understand the relevant risk disclosures and warnings. There is a substantial risk that you may lose all of your initial investment. We advise you to consider whether trading leveraged products is appropriate for you in light of your own personal circumstances. We recommend that you ensure you fully understand all risks involved before trading. Trading through an online platform carries additional risks. Please refer to our Legal documents section here.


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