Share CFDs related questions
Share CFDs represent a portion of ownership in a company. When participating in stock investments, one usually buys and sells on specific exchanges, typically paying the full price of a stock and profiting only when the stock price rises. Share CFD allows one to benefit from fluctuations in stock prices without actually owning a stock. Additionally, share CFD allows the utilisation of leverage, meaning you can add top companies into your portfolio with a smaller amount of capital.
Share CFD allows traders to speculate on the most active stocks globally. EBC connects to as many as 36 global exchanges, providing a flexible way to participate in stock trading, competitive leverage ratios, and exceptional liquidity support for share CFD trading. Since profits from share CFDs come from spreads, it allows participation in investments without owning stocks through exchanges, hence exempting from stamp duty. There's an opportunity for profit from price fluctuations regardless of whether stock price rises or falls.
EBC share CFD offers a maximum leverage of 1:20. This means you can invest in top companies with less capital, thereby having a larger potential for profits. However, it's important to note that leverage can magnify losses if the market trends unfavourably.
Share CFD reflects stock price changes and is similar to general stock trading apart from not owning the underlying asset. Therefore, it's influenced by the company’s financial status and business performance. Before participating in share CFD, it's important to understand basic financial indicators like P/E ratio, P/B ratio, etc., to evaluate a company's operations profile. Generally, indicators are affected by the industry it operates in. For instance, if a company trades at a multiple of 20 while the industry average is 30, it might indicate that the company's stock is undervalued, presenting a good buying opportunity.
Dividends refer to the profits obtained from holding share in a company. For example, if a stock pays a dividend of $0.32 per share and you own 10,000 shares, you'll receive a dividend of $3,200 on the dividend payment date. When trading stock CFDs with EBC, if you hold relevant stock CFDs one day before the ex-dividend date, you'll have the right to receive the dividend on the dividend payment date.
To ensure fund safety, it is crucial to choose a reputable and strictly regulated broker before deciding to engage in trading.
Any eligible client of EBC can claim up to a maximum of £85,000 under FCSC rules.
