Shares vs. CFDs

Buying 20,000 shares in Tullow Oil (TLW) @ 218.9p requires an outlay of £43,972 plus commission (see purple boxes above left), while the same exposure via a CFD requires just £2,189 plus comm (see green boxes above right). If a trader invests in Tullow Oil, one would assume she believes the share price is likely to move in her favour. After considering the ‘worst case scenario,’ the trader may conclude there’s little point in exposing the full £44,000 to TLW shares – some of that capital could be put to good use elsewhere in the markets.

If you had, say, £45,000 to invest in Oil & Gas shares, you could deposit that amount into a share dealing account and purchase shares in a company. You might pay 3% commission to open the position, 0.5% in stamp duty, the whole £45,000 will be tied up in company X shares and any profit or loss is based on that exposure.

Alternatively, you could deposit £45,000 into a CFD account and secure the same amount of exposure for just a small deposit – as little as 5%. With Accendo Markets, you’ll also find highly competitive dealing costs, the option to deal over the phone for FREE and our range of no-nonsense research & trade ideas delivered direct to your inbox, not to mention being  accessible 24 hours a day, 7 days a week on our research app.