A Look into Share CFDs and the Top 5 to Watch… Come Rise or Fall

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Photo by Susan Q Yin on Unsplash

Contract trading has become increasingly popular on retail investment platforms. Derivative trades allow investors to quickly turn a profit without actually owning the investment. There are several explicit types of contract trading available —some of which include futures, options, and contracts for difference (CFDs).

Because required account minimums and limits aren’t placed on the number of day trades that can be made under $25,000, CFDs are attractive to day traders and investors who like taking lucrative risks on moving investments. Many often find success with a minimal amount of loss, leveraging existing trades, or margins, in exchange for high-priced assets.

CFDs, in particular, allow investors to trade a much broader set of markets. They provide greater transparency in the profit and loss of trades should they be closed out early. 

Investors are taking a speculative approach to the rising and falling of assets, allowing them to trade those assets across several global financial markets — including foreign exchange (forex), indices, commodities, stocks, and cryptocurrency.

What are Share CFDs?

Share or stock CFDs essentially allow investors to trade stocks under the guise of a contract for difference. This means that investors can trade traditional stocks by way of CFD but trade with all the perks CFDs have to offer, including entering trades with other people’s money. 

Unlike the traditional stock market, share CFDs allow investors to profit on both the rising and falling of markets, as opposed to profiting only when a stock earns dividends or rises. CFDs can be traded up to 24-hours a day in most countries, 5 days a week. But, stocks can be traded only when the stock exchange is open, including premarket and after hours. 

The U.S. Securities and Exchange Commission (SEC) views CFDs as being too risky because there is low industry regulation and a potential lack of liquidity. Here, they’re considered an over-the-counter (OTC) product, and it’s exactly for these reasons that CFD-trading is prohibited in the U.S. unless the investor is a non-resident of the country itself. 

The value of assets can both rise and fall rather quickly. Therefore, investors should always plan to manage risk by avoiding trades much higher than they can afford to lose. 

For more information on share CFDs, click here. 

Top 5 Share CFDs to Watch — Whether They Rise or Fall

The following list includes some of the most talked-about stocks to trade CFDs right now, as well as the triggers and catalysts to watch for:

1. Netflix NFLX

If lockdowns have taught the world anything, it’s that FAANG stocks (Facebook FB, Amazon AMZN, Apple AAPL, Netflix, and Google GOOGL) are pretty much bulletproof when people are at home. In fact, while some may have experienced their ups and downs, most of them saw significant gains. 

Netflix was one of them. Even amid mid-pandemic controversy, Netflix rose to 200 million subscribers, seeing a surge of 16 million new subscribers in Q3 2020 alone. Its stock rose 70% during this time. 

As new variants of the coronavirus spread across the globe, there are whispers of lockdowns and quarantines in several areas of the world. With a pending winter in the U.S. and ongoing cases of extreme weather, investors are considering if Netflix will continue on such an incline. 

2. Ford F

It’s no secret that Ford has been working to innovate its existing cars with new all-electric vehicles (EVs) in the current pipeline. Last week, Ford saw a 3.5% increase in its stock price with the news that they are creating an all-electric transmission and partnering with a battery recycling brand to create a domestic battery supply chain for EVs. 

Ford has always been an innovator, especially in the automotive space. They’ve recently hired an executive from Apple and Tesla TSLA. 

The U.S. and other parts of the world are shifting toward an electrified future. Although some say the U.S. is decades behind other countries in electrification, the U.S. still remains a leader in the technologies by which the world does so. With talks of a $3.5 trillion infrastructure plan, investors could be in to see some wins in the future. 

3. Intel Corp INTC

What would the world be like without Intel? While it constantly faces pushback and competition from companies like AMD AMD and Nvidia NVDA, it usually finds ways to push ahead. Like this week, Intel meets with others at the White House to discuss the global chip shortage. Intel may not be the only processor — or even the leading processor — in EVs. Still, it is definitely a key player in the electrification of future roadways and may be one choice for a CFD to invest in. 

4. Caterpillar Inc CAT

Caterpillar — or Cat, for short — is currently an underperforming stock. Given light to the pandemic, multiple lockdowns, and a limited supply chain, it was inevitable that Cat would see a slight downfall. However, as the world economies continue to pick up and, especially when and if the U.S. comes to an agreement on infrastructure, this stock is expected to reach new heights. 

Caterpillar recently reported a 26% return on equity. It also announced the acquisition of CarbonPoint Solutions, a company that provides technology to concentrate and capture CO2 for use or sequestration. So, the outlook might be shining brilliantly for this stock. 

5. Google GOOGL

Google is an excellent stock to trade, period. While it’s not as volatile as the other stocks on this list, it’s still one of the biggest growth stocks of this generation.

Google is also a safe bet. It doesn’t move too much too often, but when it does, investors can see nice gains. 

As Google expands further into the EV realm — especially with its own Waymo Technologies, this is projected to grow even more. 

Introducing Axi

Founded in 2007, Axi is an Australian startup and industry-leading platform for online trading. Axi allows investors to trade across a range of assets including forex, share CFDs, crypto CFDs, indices, and commodities. 

To learn more about trading share CFDs versus traditional share-trading with Axi, visit the company here and open an account, today.

Disclaimer:

The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.