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According to Is CFD a viable option for long-term trading?, CFDs are inappropriate for long-term investments because of financing fees and margin calls. This conclusion appears to be true only if the CFD positions use borrowed money (leverage). Suppose I do not use leverage to buy CFDs; I always use 100% margin. Does this make long-term investing viable using CFDs? What are the pitfalls when making long-term investments using unleveraged CFD positions?

(By "long-term", I mean an investment horizon of 1 to 10 years.)

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  • Dear close-voters, I already know that it is possible to trade CFDs without leverage. That is not my question. My question is about the viability of long-term investing using unleveraged CFDs.
    – Flux
    Sep 29, 2020 at 7:47

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Was looking into this myself.

The basic answer is no.

This is mainly due to third party risk. With and over the counter CFD you are making an off exchange agreement with the company issuing the CFD. Its a possibility that they go bankrupt over the long term. With a CFD you dont own the underlying asset. Equally, while some providers offer CFDs without leverage or overnight fees there is always a possibility that they change the terms and conditions. For long term holds buying the actual stock is the better way.

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  • Unless it's not viable to buy the underlying position without acquiring the minimum capital to fund the position, such as in the case of an interest rate futures contract (a form of CFD).
    – user68318
    Jul 28, 2023 at 16:02

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