When there is good then there is bad. Both good and bad goes hand in hand. Similarly, if a thing has some advantages then there will definitely be disadvantages. Talking about Contract for Difference trading, it is one of the most sought after types of betting going on now-a-days. People love betting and they enjoy the thrill and the risk involved in it. Simple business studies explain that if a person is taking more risk than his possibility to earn more profit increases. Same goes in the world of investment. Let us look at some of the advantages of CFD Trading:

1. Trading on Margin: This is indeed the first benefit or advantage of this type of trade. Investors can use leverage in order to increase his returns and through this he can also enhance his levels of market exposure. An investor because of this is not required to invest everything he has.

2. Low cost on transactions: A trader can save money on transactions. This is because the amount of brokerage a trader needs to pay in this case is much less than the brokerage paid in conventional share or stock market.

3. Dealings out of normal hours: Another advantage of CFD trading is that investors in this case have got an opportunity to trade beyond dealing hours as well.

4. Expiry date: There is no specific expiry date for investors in this scenario.

5. Stop Loss: This facility helps an investor to actually control his losses.

6. Online records: With technology on a rise, one can actually check daily accounts and statements online to keep in touch with what is happening.

Let us look at the other side of the CFD trade. Few disadvantages are:

1. Because of the facility of investing with less capital, an individual can actually indulge in over investing which can be bad for him as an individual trader. Excess of everything is bad. People engaged in this type of market should be cautious.

2. In this scenario, an individual does not actually buy or sell a commodity. There is no physical exchange of products or shares. Hence, a CFD trader doesn’t have any rights of a shareholder.

3. There can be additional charges in case of positions held by an investor for the night as they are subject to overnight financing as well.

Looking at the advantages and disadvantages of this type of market betting, one can easily get to the conclusion that Contract for Difference trading is good and one can reap benefits out of it. One requires learning the trade and understanding the market before investing money or putting money on stake. It is always better to understand something in theoretical manner and then indulging in to practical action. There are people who criticise it however; there are people at the same time who want to invest more and more money, time and effort in this. Choose it if it suits you.