Benefits of CFDs
Alternative to traditional share broking. The table below illustrates how a share investment held for 30 days might compare to if it was done as a CFDs trade.
| Trading traditionally | Central Markets | |
|---|---|---|
| Buy 10,000 shares @ | 140.0p | 140.1p |
| Cash outlay* | (£14,000) | (£1,401) |
| Sell 10,000 shares @ | 200p | 199.9p |
| Gross profit | £6,000 | £5,980 |
| Stamp duty** | (£70) | £0 |
| Commission (buy/sell) | (£25.50) | £0 |
| Tax @ 18% | (£1,080) | (£1,076.40) |
| Overnight financing | £0 | (£30) |
| Net profit | £4824.50 | £4873.6 |
| Return on Capital Employed | 34% | 347% |
| ROCE working: 4824.5 / 14000 x 100% | ROCE working: 4873.6 ÷ 1401 x 100% |
* This is using a Margin requirement of 10%. NB you can lose more than this deposit.
** Tax laws can change.
Remember that the risk is still the same for either scenario.
For example, if the company you were trading on was to go bust and its share price plummeted to 0p overnight, then you would still be liable to a £14,010 loss with Central Markets and not just the 10% deposit of £1,401.
The other benefit of executing this trade as a CFD is that you’ve freed up almost £12,600 of spare capital to use elsewhere or remain in the bank earning interest (which could go some way to paying for the overnight financing).
As with all CFDs you do not own or owe the underlying asset.
So, if you open a buy CFD on a share you will not have any voting rights.




