WHY TRADE STOCKS CFDs – Ohio Markets

Why Trade Stock CFDs?

Understand the benefits, risks, and potential rewards of trading stock CFDs.

TRADE WITH OHIO MARKETS

Stock CFD trading is a popular way to speculate on the price movements of shares without owning the underlying stocks. Whether you are looking for short-term trading opportunities or aiming to diversify your portfolio, stock CFDs allow you to participate in global equity markets with flexibility.

Risk Warning: CFDs are complex instruments and carry a high risk of losing money rapidly due to leverage. Ensure you fully understand how CFDs work and assess whether you can afford the risk before trading.

Benefits of Trading Stock CFDs

Trading stock CFDs allows traders to respond to market movements efficiently. Below are some of the key benefits associated with stock CFD trading.

Dividend Adjustments

When trading stock CFDs, you do not receive actual dividends since you do not own the underlying shares. However, some brokers may apply dividend adjustments on long positions to reflect dividend payments made by the underlying company.

These adjustments:

Are not guaranteed
Vary depending on the broker
Are subject to terms and conditions

Always review Ohio Markets’ dividend adjustment policy before trading.

Portfolio Diversification

Diversification is a risk management strategy that involves spreading exposure across different stocks, sectors, and regions.

With stock CFDs, you can:

Trade companies across multiple industries
Access global markets from one platform
Combine stocks with other asset classes such as indices, commodities, or ETFs

A diversified portfolio may help reduce exposure to volatility in any single stock or sector, though it does not eliminate risk.

High Liquidity

Stocks are among the most liquid financial instruments, traded on major global exchanges such as the NYSE and NASDAQ. Stock CFDs mirror this liquidity, allowing traders to enter and exit positions efficiently under normal market conditions.

Liquidity Comparison by Asset Class

Asset Class	Ease of Buying/Selling	Access to Funds	Key Characteristics
Stocks	High	Instant to 2 days	Traded on major exchanges with high volume
ETFs	High	Instant to 2 days	Exchange-traded, diversified instruments
Bonds	Medium	Days to weeks	Less liquid than stocks
Real Estate	Low	Weeks to months	Requires legal and transactional processes
Commodities	Medium	Days to weeks	Physical assets may take longer to sell
Mutual Funds	Medium	1–3 business days	Redemption processed after trading day

Focus on Individual Companies

Stock CFDs allow traders to speculate on the price movements of individual companies without purchasing physical shares. This enables traders to apply:

Fundamental analysis (earnings, financials, news)
Technical analysis (charts, indicators, trends)

Traders can focus on companies they understand and follow market movements more closely.

Risk vs Reward in Trading Stock CFDs

While stock CFDs offer flexibility and opportunity, they also involve significant risks—especially due to leverage.

Potential Rewards of Trading Stock CFDs

Capital Appreciation
Profit from upward or downward price movements.
Dividend Adjustments
Some long positions may receive dividend-related adjustments.
Short-Term Trading Opportunities
Active traders may benefit from intraday or short-term price fluctuations.

Past performance is not a reliable indicator of future results.

Risks Associated with Trading Stock CFDs

Market Volatility
Prices can move rapidly due to earnings reports, news, or economic events.
Leverage Risk
Leverage can magnify both gains and losses, potentially exceeding your initial investment.
External Factors
Economic downturns, geopolitical tensions, or industry-specific issues can impact stock prices.
Experience Risk
Lack of knowledge or emotional trading decisions may increase the likelihood of losses.

Managing Risk When Trading Stock CFDs

Effective risk management is essential for long-term sustainability.

- Diversify Your Exposure
  Avoid concentrating your trades in a single stock or sector.
- Use Stop-Loss Orders
  Automatically limit potential losses by setting predefined exit levels.
- Maintain Portfolio Balance
  Regularly review and adjust positions to align with your trading goals.
- Assess Your Risk Tolerance
  Only trade with capital you can afford to lose.
- Understand Leverage
  Always be aware of how leverage impacts your positions.

Trade Stock CFDs with Ohio Markets

Stock CFD trading offers flexibility, access to global companies, and the ability to trade both rising and falling markets. With Ohio Markets, you can trade stock CFDs using a powerful platform, advanced tools, and comprehensive educational support.

CFDs are complex instruments and may not be suitable for all traders.