To begin with, let’s find out which feature of the CFD trading attracts more and more followers. Probably that’s because they don't require a retail investor to apply for a loan. Additionally, it’s beneficial that, when trading CFD, you don’t have to deal with expensive middlemen that give you an access to trading platform. Do you know that you can open a CFD account in a matter of minutes. This implies that you can start trading, and clock profits in your account all in one day.
Now let’s make a comparison of CFD trading and Margin lending:
First of all it should be noted that CFD trading is typically performed on-line. Here we Can observe that the CFD trader's portfolio is marketed all day, still in case of margin landing, we can see the so called "end of the day portfolio revaluations". How can it be interpreted, you may ask? This means that the risks of an investor is less and he has a better ability to manage risk on account of increased visibility. Additionally a trader has much more time to react.
Another difference is that CFD traders receive a dividend and margin lenders "franking credits". The cause is that a trader in CFD don’t really own the share, although in margin lending a trader owns a share. Nonetheless, it’s really not a big minus as for CFDs, as CFD holders are usually looking at short-term gains rather than long-term holdings.
Now, let’s talk about some more differences between this two types of financial trading. If having a closer look CFD, we can see, that the process of sales here is easy and flexible. And a margin lending can be quite complicated.
Finally, trading CFDs you will spend less on brokers fees than on margin lending. In fact CFD brokers charging 0.1 percent and with margin lending you will have to pay 0.5 percent. However, you should also know that interest charges on CFDs are higher than that of margin lending.
To summarise, it should be noted that both CFD trading and margin trading have their pluses and minuses. However, if you are aimed at short-term trading, CFD trading is more suitable type of trading for you.
If you are interested in understanding how you can use the profit potential of CFD trading you can learn from other expert CFD traders and share your thoughts and insights on IC Markets very informative blog.