CFD vs ETFs Differences and Similarities

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

Sign Up Now

about-monitors

capex-cfd-1-en

Wide range of tradable assets

Diversifying your trades is a great way to decrease the risk of losing all of your money. With us at CAPEX, you can invest in over 2100 tradable instruments through CFDs.

We offer traders CFDs on stocks, Forex, indices, blends, bonds, ETFs, crypto, and commodities.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 trading platform

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 CFD demo trading account.

Sign Up Now

explore-cx-trader

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 trading with leverage also means a higher risk, so it’s essential to have a good understanding of how the CFDs work.

Here at CAPEX, we allow traders to invest in over 2100 instruments through CFDs. We also offer the opportunity to trade with leverage, as well as StoX, a product without leverage.

Get Started with CAPEX

Experience a new level of trading with the right support when you need it. Sign up for a free account and trade smart with CAPEX.com.

Create Account

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 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.

Knowledge is Power!

When it comes to your money - it's priceless.

An investment in learning how to trade always pays the best dividends. Get access to the right resources, tools and information so you can trade with all the information available!

Sign Up and enjoy our in-platform trading lessons

INTRODUCTION TO FOREX

Available in platform

13:20

FOREX INDICATORS

Available in platform

13:20

FOREX CANDLESTICK GUIDE

Available in platform

14:38

UNDERSTANDING AND USING FIBONACCI

Available in platform

04:20

FOREX CHART FORMATIONS PATTERNS

Available in platform

14:27

TIMING IN FOREX

Available in platform

06:20

CRYPTOCURRENCIES

Available in platform

82:25

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. ETFs can be used to invest in a wide range of assets, including stocks, commodities or bonds.

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. Traders 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.
ETFs offer traders diversification.

Cons of trading ETFs

ETFs 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.

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 ETFs are 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 ETFs.

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.

platforms-devices

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 2100 instruments that can be invested in through CFDs. Whether you’re interested in the Forex market, stocks, or even cryptocurrencies – 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.

Register

Register an account on CAPEX.com and start trading.

Verify

Send over your documents and verify your account.

Deposit

Login into your CAPEX.com account and deposit money.

Trade

Start trading with CFD’s and over 2100 other instruments.

Register Account

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

Hop on to the website and click on sign up and enter a few basic details, including your name and email address.
Then click on sign up, and you’ll be redirected to our trading platform, where we’ll ask you to complete your registration process.
Enter a few more details, including your income and taxation information.
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 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 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

🤔 Is trading with leverage suitable for traders?

👀 Can CFDs make you rich?

🤷 Can I lose more money than I invest in CFDs?

HIGH RISK INVESTMENT WARNING: CAPEX.com is a website operated by Key Way Investments Limited, which is authorised and regulated by the Cyprus Securities and Exchange Commission, licence number 292/16. Administrative Address: 18 Spyrou Kyprianou Avenue, Suite 101, Nicosia 1075, Cyprus.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68.60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the risk of losing your money. Trading through an online platform carries additional risks. Refer to our Regulation section here.

Restricted Jurisdictions: We do not establish accounts to residents of certain jurisdictions including Japan, Canada and the USA. For further details please see Terms & Conditions.

Key Way Group Ltd is the holding company of Key Way Investments Ltd, JME Financial Services (Pty) Ltd and Key Way Markets Ltd. Key Way Investments Ltd operates CAPEX.com and is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) (license no. 292/16) with branches in Romania and Spain, and registered with the Romanian Financial Supervisory Authority (ASF) (registration no. PJM01SFIM/400013), and with the Spanish National Securities Market Commission (CNMV) (registration no. 129), respectively. JME Financial Services (Pty) Ltd operates za.capex.com and is authorized and regulated by the South African Financial Sector Conduct Authority (FSCA) (license no.37166). Key Way Markets Ltd operates ae.capex.com and is authorized and regulated by the Abu Dhabi Global Market (ADGM) Financial Services Regulatory Authority (license no. 190005). KW Investments Ltd operates sc.capex.com and is authorized and regulated by the Seychelles Financial Services Authority (FSA) (SD020).