ForexTB: What is a Stock CFD Trading?

10 December, 2020

A stock is a term used when describing equity in public listed companies that have completed an Initial Public Offering (IPO), and allows retail traders to buy shares in the company. As a “shareholder”, the investor theoretically owns a percentage of what the company owns (or owes). The main determining factor as to whether a stock is traded at a higher or lower price, is the company’s profitability, or lack of profit.

The idea of selling equity in companies has been popular since around the 16th century, and today, there are around 60 major stock exchanges around the world. Therefore, some of the largest include: The London Stock Exchange, The New York Stock Exchange and The Tokyo Stock Exchange.

What is a Stock CFD Trading?

ForexTB gives you the chance to trade CFDs (contracts for difference) with stocks as their underlying asset. You can choose whether to go long or short (buy or sell) a company’s shares without physically owning them, and without having to physically be at one of the stock exchanges around the world. You can use the ForexTB platform to trade CFDs on stocks from anywhere.

For example: if you researched and found that you believe that the price of Amazon shares is going to decrease, you would sell. And if you were correct, you would earn from the difference of price. When trading CFDs on stocks, you can potentially earn a profit whether the price rises or falls, if your speculation is correct, and you can also be entitled to dividends if the company announced pay-outs to shareholders. However, if your speculation is wrong you would realise a loss.

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