Instead of depositing 100% of the transaction value, the investor is only required to deposit margin as collateral, usually only 20% of the transaction value, though 10% margin deposit is available. Amongst the benefits of trading CFDs are:
Selling Short:Using an equity CFD this allows the investor the ability to go short on a share - previously a costly and complicated procedure available only to significant and sophisticated investors now allowing the investor to take advantage of anticipated price declines in the market.
Reduces Transaction Costs:There are no other costs involved other than a low transaction commission - there is no Stamp Duty to pay, PTM levy or other local charges. Commissions are fixed and visible with no widening of the market spread and no storage fee.