Similarity to the underlying market
CFDs are designed to mimic the trading environment of their underlying market fairly closely. The exposure you get from buying an Apple share CFD, for instance, is the equivalent of buying a single share in Apple – if you want to buy the equivalent of 2000 Apple shares, you’d buy 2000 Apple share CFDs. However, when trading share CFDs, your positions will be adjusted to offset the effect of any dividend payments and you won’t receive shareholder privileges. You will also be subject to ongoing margin obligations.
Buying or selling a forex CFD, meanwhile, is equivalent to buying a certain amount of base currency by selling the equivalent amount of quote currency. So buying a single standard CFD contract on GBP/USD would give you the same exposure as buying £100,000 in US dollars.
So if you’re already experienced in non-leveraged markets, CFDs can be more immediately familiar than other forms of leveraged trading.