What’s the difference between investing in shares and trading in CFDs?

When you trade CFDs, you never own the actual underlying asset; instead, you bet on its price movements. In short, what you actually purchase is a contract. When you invest in shares, however, you buy and sell the shares themselves.

What underlying assets can I buy or sell CFDs on?

Some of the underlying assets that you can trade CFDs on include Canadian and international shares, indices, commodities, foreign exchange and treasuries.

I’m a casual investor - should I start trading CFDs?

Trading CFDs is not recommended for casual investors. Because of the specialized knowledge required and high level of risk involved, this type of trading is best left to expert investors.

But I can only lose the money I invest, right?

Wrong. Because you are trading with leverage, it’s possible to end up losing significantly more than your initial investment amount.

How do I know which CFD trading platform is right for me?

The best way to find a good trading platform is to do plenty of research. As well as right here at finder.com/ca, you can find plenty of useful information on blogs, forums and the websites of individual providers. Examine the features and benefits each trading platform offers and open a demo account if possible to try before you buy.

Will a CFD education seminar teach me everything I need to know?

While you can certainly learn useful information at a training seminar run by a reputable financial or training organisation, attending a course is by no means all you need to fully prepare you to trade CFDs.

I’m looking for a steady investment - is this something trading CFDs offers?

No, CFD trading is risky and far from a steady investment option. If you’re looking for safe and secure returns on your money, consider other investment opportunities.

I’ve read about TSX exchange-traded CFDs - what are they?

TSX exchange-traded CFDs are CFDs that are listed on the Toronto Stock Exchange (TSX). With terms and conditions set by the TSX, these are slightly less risky to trade than other CFDs and can be traded through brokers that have been authorized by the TSX.

Will I receive dividends?

When you buy shares in a company you are usually entitled to dividends, and although trading CFDs means you never actually purchase shares, you can still take advantage of some of the benefits of ownership. When you buy a CFD, your trading account will be credited with a certain amount of money that reflects the dividend amount an ordinary shareholder would receive. When you sell a CFD, your account will be debited a similar amount which will be paid to the counterparty.

Is there a minimum investment amount?

No, there is no real minimum limit when you trade CFDs.

The exact process for buying and selling CFDs will vary depending on the trading platform you choose. Contact your trading platform operator for detailed information and instructions.