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I'm new to trading. Based on what I read, trading CFD involves high risk because of leverage.

Is it possible to trade CFD stocks without leverage (in Etoro for example)?

If this is possible, then I would lose/gain only the percentage by which the stock goes down/up.

Thank you

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  • In a simgle word, NO !!. Else there is no difference between buying up stocks and using CFD.
    – DumbCoder
    Commented Feb 4, 2015 at 15:41
  • @DumbCoder, I posted hour ago that you can actually but I think that if you remove the leverage (1x) you are actually buying the underlying stock on etoro and not CFD anymore. It seems there was improvement last year and now you can have both CFD and real stock and you can work with whichever you prefer. So I assume 1x real stock will result in no interest charge and overnight hold charges on the platform.
    – Vitaliy Terziev
    Commented Nov 19, 2019 at 15:53

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Generally not, however some brokers may allow it. My previous CFD Broker - CMC Markets, used to allow you to adjust the leverage from the maximum allowed for that stock (say 5%) to 100% of your own money before you place a trade. So obviously if you set it at 100% you pay no interest on holding open long positions overnight.

If you can't find a broker that allows this (as I don't think there would be too many around), you can always trade within your account size. For example, if you have an account size of $20,000 then you only take out trades that have a face value up to the $20,000. When you become more experienced and confident you can increase this to 2 or 3 time your account size.

Maybe, if you are just starting out, you should first open a virtual account to test your strategies out and get used to using leverage. You should put together a trading plan with position sizing and risk management before starting real trading, and you can test these in your virtual trading before putting real money on the table.

Also, if you want to avoid leverage when first starting out, you could always start trading the underlying without any leverage, but you should still have a trading plan in place first.

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If you don't need leverage, then it's a better idea to just buy the underlying sock itself. This will net you the following benefits:

  • Dividends: You may receive dividends on the stock.
  • Less counter party risk: CFD's are contracts with your broker. If the broker goes bankrupt you lose everything. This is not so when buying a share.
  • Transparency: CFD dealer's prices are notoriously complex to hide the fact that they charge you hidden costs.
  • No interests: You can easily keep a long buy and hold position without paying any interests to the CFD dealer.

Leverage is for speculating. If you don' want to be leveraged, then invest long term.

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    Very one-sided argument maybe would have been better to point out the pros and cons instead of just showing your bias! Some points are not even accurate - regarding dividends, you do get paid dividends with CFDs and usually upfront on the ex-dividend day. Regarding pricing, most good CFD providers match the underlying price pretty accurate or else their clients would leave them. Transparency - some CFD providers have Direct Market Access prices in which case they use the actual pricing of the underlying - I don't know how much more transpaent you can be.
    – Victor
    Commented Feb 17, 2019 at 19:34
  • Also, regarding interest, you can actually get interest paid to you if you take a short position.
    – Victor
    Commented Feb 17, 2019 at 19:35
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Yes, just set aside the amount of money. If you buy a cfd long in a stock for a 1000$, set aside 1000$. If you buy a cfd short, set aside the same amount and include a stoploss at the value at which the money is depleted. In this case however, you can stil lose more, because of opening gaps.

By doing this, you replicate the stock return, apart from the charged interest rate.

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  • Or you can invest the money you set aside to offset the charged interest rate.
    – Yosef Weiner
    Commented Feb 5, 2015 at 2:10
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Very few brokers offer unleveraged trading of CFD instruments. The one broker I know which offer such kind of unleveraged trading is DeltaStock They have a special accounts named DeltaSMART where you will be able to trade CFD on stocks and some futures as if you were owning the underlying asset i.e. you won't pay any additional taxes for keeping the position open for long period of time like you do with a normal CFD broker and which is a major disadvantage. You will be able to open positions only up to the value of your deposit. I think this is a good way to invest in stocks relatively cheaper than purchasing the real stocks on an exchange, where commissions for every trade can be significant. You can learn more about various CFD brokers and their offers, but I think there are very few brokers who allow trading on zero leverage account, and most of them even don't offer this on their sites and you should personally contact and ask them.

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You can but there is no point trading CFD's seeing you may still lose more than your investment due to slippage

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