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CFD vs Stocks Differences and Similarities

CFDs and stocks are both effective trading instruments with excellent earning potential; however, one might be a better choice than the other for you.

Continue reading our CFD vs stocks guide to figure out which instrument is better for you, and how we at CAPEX offer the best CFD trading experience for beginners and experts alike.

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Roy Connor
Author:
Roy Connor
Last Updated on:
03/07/2025
Topic:
Trading
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Trade CFDs on a wide range of assets

Having the opportunity to invest in a diverse range of markets is essential as it allows traders to spread out their trades and reduce the risk of loss. Here at CAPEX, we offer traders over 2100 unique instruments that can be traded through CFDs. You can trade CFDs on stocks, indices, ETFs, commodities, bonds, blends, forex, and cryptocurrencies, all through a single CFD trading account.

Numerous learning tools to help traders

The most important factor in becoming an expert trader is focusing on ongoing learning. The more you know, the better you trade.

Keeping that in mind, we at CAPEX offer our traders a number of learning tools and features including CAPEX Academy, where everyone can learn trading through video content. Similarly, we have an expert trading blog that keeps traders updated with ongoing market trends. We also have a trading dictionary so traders can make themselves familiar with commonly used phrases and terminologies.

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What is a CFD? – how CFDs work

CFDs, short for contract for differences, are a famous form of financial derivatives in which two parties agree to trade a contract based on an asset’s future price speculation. A CFD trader doesn’t actually buy and sell an asset like you do while trading stocks; instead, the trader buys a contract from a CFD provider.

CFDs can be traded with leverage, which means you can invest a limited amount of funds in obtaining greater market exposure. Here are the major pros and cons of trading CFDs:

Pros of trading CFDs

  • CFDs can be traded on a wide range of assets, including stocks, indices, ETFs, indices, forex, crypto, commodities, and blends.
  • CFDs can be traded on margin so traders can invest less to gain greater market exposure.
  • If you’re aware of a few effective online trading strategies, CFDs can be extremely profitable.
  • CFD traders can benefit from both falling and rising markets by going long or going short (either buying or selling a position).

Cons of trading CFDs

  • CFDs are known for being high-risk instruments & require good strategy and proper knowledge to be traded profitably.

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What are stocks? – Understanding how stock trading works

A stock refers to the total shares that make up a company’s entire worth. When a trader buys a company’s share, he or she becomes a partial owner of that company and is entitled to a share of the company’s profits & assets. Shareowners may also get the right to vote during a company’s annual shareholder meeting.

Stock trading can be done through online brokerage platforms and are amongst the most popular financial instruments traded for profits. If you feel like a company’s value will rise shortly, you can invest in its shares. If the company’s share value does go up, you’ll make a profit. Although, if the company goes down in value you might end up in loss.

A huge plus point of trading stocks is that they offer dividends, which provides financial security to investors.

Pros of stock trading

  • Effective way to earn short term profits or long term profits.
  • You can earn dividends through stocks.
  • Stock markets tend to rise with time, so you can invest long term and get good returns.

Cons of stock trading

  • It’s not uncommon for the stock market to crash, so there’s always a risk of losing your money. For instance, the 2008 stock market crash happened within hours.

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CFD vs Stocks - Differences & similarities

Stocks and CFDs are similar in a few ways; for instance, both are traded for the same reason, which is to make a profit. Plus, both offer users a wide range of trading opportunities. However, there are several differences to consider as well.

Major differences between stocks and CFDs

  • When trading CFDs, traders don’t own the underlying asset. On the other hand, stock trading requires you to buy and sell stocks.
  • CFD trading is done with leverage so traders can invest a limited amount of funds to gain greater exposure in the market.
  • CFDs can be traded on a wide range of assets, including stocks, indices, ETFs, commodities, blends, forex, and crypto. Stock trading means simply trading stocks or shares of companies.
  • You can trade CFDs with lower capital and higher exposure. However, higher exposure also means a higher risk.
  • You can go short with a CFD, which means you can take advantage of a declining market as well as a rising market.

Trade with some of the lowest fees

Having low trading fees is always a plus point as it allows you to avoid unnecessary expenses while giving you the opportunity to keep most of your profits to yourself. Here at CAPEX, we offer traders some of the lowest trading spreads, fees and commission rates that are extremely low as well. On top of that, we do not charge a deposit or withdrawal fee, nor do we have a minimum deposit amount. Our aim is to provide the best possible CFD trading experience with the lowest trading fees and costs.

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So, should you trade CFDs?

If you’re looking for an instrument that allows you to invest less capital in return for greater market exposure, opens doors to endless investment opportunities and has lower trading costs, CFDs should be your go-to option. Here at CAPEX, we’re dedicated to making your CFD trading journey as smooth as possible with the help of advanced learning tools and excellent trading platforms.

On the other hand, it’s essential to know that trading CFDs with leverage also represents a high risk. Therefore, we recommend you practice CFD trading in our demo account using virtual money before investing with real money.

How to choose the best CFD trading platform? –Why trade CFDs with CAPEX

Trading CFDs can be extremely rewarding if you choose the best CFD trading platform for your trading journey. Continue reading to find out what to look for in the best online broker for beginners and how CAPEX offers all of these things.

License and regulation

The first sign of a secure and legitimate broker is the license and regulation it practises under. We at CAPEX.com operate under Key Way Investments LTD, a Cyprus Securities and Exchange Commission (CySEC) regulated entity, which is a tier-1 financial authority. Being licensed by CySEC means having to follow strict rules and guidelines to ensure any of our client’s information and funds are fully secured.

As CAPEX, we also operate in Seychelles, the United Arab Emirates and South Africa, under other entities that are part of the group, which are regulated by the Seychelles Financial Services Authority, the ADGM Financial Services Regulatory Authority, and the Financial Sector Conduct Authority (FSCA), respectively.

User-friendly trading platform

Trading on a platform that’s confusing or isn’t smooth could lead to an extremely poor trading experience. Your priority should be finding a trading platform that is highly intuitive, has a smooth interface and is easy to use for every trader. At CAPEX, we offer traders two unique trading platforms – The MT5 Trader & Capex WebTrader, both of which are extremely user-oriented and easy on the eyes. All our features are laid out neatly on our platform, with the most important functions being just a click away.

Available customer support

Any broker that cares about its traders and the outcome of their trading experience will offer available customer support. After all, what could be worse than waiting for an important issue to be resolved? Here at CAPEX, we have a team of dedicated customer support advisors who are available seven days a week. Our multilingual customer support team can be reached through email, live chat, and phone. Plus, we have an elaborative FAQs page on our website, where we have answered all commonly recurring questions in a thorough manner.

Learning tools and features

The secret to succeeding as a trader is focusing on ongoing learning. The more knowledge you obtain, the better decisions you’ll make while investing. At CAPEX, we offer our traders several learning tools and features such as a trading dictionary that allows you to become familiar with basic trading terminologies. We also have an online trading school named CAPEX Academy, where everyone can learn trading through informative videos made by investment experts. Similarly, we allow our traders to track and follow the expert traders through a tool integrated into our MT5 trading platform.

 

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Sign up with CAPEX today to begin your trading journey – A step by step guide

Here’s a step by step guide on signing up for a CFD trading account with us at CAPEX:

  1. Visit our website and click on the sign up/ open account option.
  2.  Enter a few basic details, including your email address and date of birth, then click on sign up.
  3. You’ll be redirected to our trading platform, where you can complete your account opening process by entering further details, including your income, taxation, and credit history.
  4.  Last but not least, you’ll have to take a trading assessment. This is just to assess your trading skills so we may ensure that you don’t trade beyond your capacity.

Once you’ve completed the signing up process, your account should be verified and ready to use in no time. We don’t have a minimum deposit requirement, so you can begin your trading journey straight away. Although, we do recommend starting off with smaller investments and practicing stocks trading with demo account first to reduce risk.

Final thoughts – Trade CFDs with CAPEX

Deciding which instrument to trade can be tough, as each one has its own benefits and risks. While CFDs and stocks are both profitable instruments, CFDs might be the better choice for you based on a few factors. For instance, CFDs offer more trading options, they can be traded with limited capital, and CFDs allow traders to benefit from rising plus falling markets.

Being the best CFD broker for every kind of trader, at CAPEX, we are dedicated to providing the best CFD trading experience. Luckily we’re able to achieve our goals with the help of excellent trading platforms, high-quality learning tools, excellent customer support, a wide range of CFD offerings, and a lot more. Hop on to our website and sign up with us for free to begin your CFD trading journey today.

CFD vs Stocks – FAQ

Can I trade CFD on stocks?
Are CFDs suitable for all traders?
Should I trade with high leverage?
Why are CFDs high-risk instruments?
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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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