A CFD is a Contract for Difference, and Stock CFDs allow traders to speculate on the price movements of an underlying stock without taking ownership of the stock itself. CFD Stock traders can take long or short positions when they trade the stock market with CFDs, meaning they can find opportunities in both bullish and bearish markets. Stock CFDs are also leveraged products, allowing traders to make the most out of their capital and gain full exposure for a small initial margin deposit.

Getting started trading Stock CFDs online is a simple process at Alchemy Markets. We provide access to the best stock trading platforms and apps in the industry, MetaTrader 4 and MetaTrader 5, equipped with superior charting tools and technical indicators with which you can trade the stock market.

Set up and fund your live account, select the stock on which you would like to speculate, take your position depending on whether you think the stock price will rise or fall, decide on the size of the position you want to open, and place your trade. At Alchemy Markets, you can execute trades on desktop or on mobile via our downloadable MT5 mobile apps.

Buying stock on margin means to take out a margin loan to invest in stocks. Often, rates for margin loans for traditional stock investments are much higher than rates for trading Stock CFDs. Traders may also accrue interest charges on their margin loans. Comparatively, CFD Stock trading can be more cost-effective, as they are leveraged products that do not require traders to cover the full size of the trade with their funds at the outset. As CFD traders speculate on price movements instead of owning the stock, CFD trading also does not require availability of stocks on the market in order for the trade to be executed.

Yes. Due to the ease and flexibility in trading Stock CFDs, many favour trading them in the short term to benefit from small price movements in the market. Day-trading Stock CFDs is popular, among other short term strategies.

A stock split occurs when a company decides to increase the number of shares in circulation in the stock market. During stock splits, the share price will be decreased proportionately to ensure the company’s market capitalisation is not affected. When a stock split occurs, CFD providers will adjust CFD pricing according to the split to reflect the new prices of its underlying shares.

The main ways in which CFD Stock trading differs from Stock trading are the trader’s ability to use leverage, the opportunity to benefit from both bullish and bearish markets, stock ownership rights, and rules and requirements for trading.

Stock CFDs are leveraged products and traders can open larger positions by providing only a fraction of the capital and borrowing the rest from their broker. CFD Stock traders can also go long or short, meaning they can find opportunities to trade the stock market whether share prices are increasing or decreasing.  Stock CFD Traders also do not face standard Day Trading rules like in Equities, where a certain amount of capital and other requirements are needed to be able to trade more frequently.  Finally, unlike Stock traders who purchase and then sell the stocks they trade, CFD Stock traders do not take ownership of the stocks they are trading at any point in time but simply speculate on their price movements in the market.

You can calculate your Stock CFD order size by multiplying the number of contracts in your order with the cost of each contract, which is based on the price of its underlying stock upon purchase and the number of units of the stock purchased. You should also take into account the use of leverage, in which case the full position size will be magnified by the amount of leverage you choose to utilise.

For example, Trader A buys 2 lots of AMZN at the price of $134.16. The contract size for AMZN at Alchemy Markets is 1, which means each lot represents a single share. In this case, the order size/notional value of the trade equals 2 shares of AMZN, which is $268.32

To find the used margin, we can refer to the Margin Percentage of the instrument by checking its Specifications on MetaTrader. 

Since the margin percentage is 5% for AMZN, the margin used for this trade is $268.32 * 5% = $13.42.

No. A Stock CFD is a contract exchanged directly between the trader and the contract provider, typically a CFD stockbroker. The value of a Stock CFD is derived from the share price of the underlying stock on which the trader is speculating. This means the performance of a stock on the market and its supply and demand will have an impact on the CFD, but not the other way round.