All trading involves risk. Losses can exceed deposits.
Over 40 years’ heritage
Over 185,000 clients worldwide
Over 15,000 markets

CFDs vs share dealing

Learn more about the differences between CFD trading and share dealing, and which of them could be right for you.

All trading involves risk. Losses can exceed deposits.

CFDs

  • Used to trade all sorts of instruments, including shares

  • Free from stamp duty, plus any losses can be offset against profits for tax purposes1

  • Trade using leverage to amplify profits – but losses can also exceed your deposits 

  • Go long and short on a market’s direction

  • Positions are adjusted to offset changes from dividends 

  • Deal around the clock on a number of markets

  • No shareholder privileges

Share dealing

  • Trade shares and ETFs

  • Trade via a stocks and shares ISA or SIPP for tax-free profits1

  • Limit risk to your initial outlay 

  • Deal only on rising prices

  • Receive dividends (if paid)

  • Deal during stock exchange opening hours

  • Receive shareholder privileges, such as voting rights on major company issues

Which is best for me?

Both CFD trading and share dealing offer ways to take advantage of price movements in financial markets – and both can be a great fit for your trading strategy. Take a look at the key points below to discover whether CFD trading, share dealing or a mix of the two is the best fit for you.

CFD trading could be for you if...

   

  • You want to trade a range of instruments simultaneously, including indices, FX and shares

  • You want to offset losses against profits as a tax deduction

  • You want to take advantage of leverage 

  • You want to trade on falling markets as well as rising ones

  • You want access to markets outside traditional dealing hours 

  • You want a corporate or professional trading account

  • You want to use the tax-deductible benefits of CFDs as an effective way to hedge 

Share dealing could be for you if…

   

  • You want to take advantage of tax-efficient savings accounts and pensions

  • You want to ensure your losses won’t exceed your initial deposit

  • You aren’t yet comfortable with the added risks or complexities of CFDs, and want to learn more about the markets

  • You want to hold the physical shares, and benefit from shareholder privileges

  • You want to trade CFDs using shareholdings as collateral

  • You want to receive and compound dividend income

Example CFD trade vs share deal

Buying Barclays 

  CFD trade  Share deal

Underlying price

208 208
Our price 208 / 208.1

 

208

Deal

Buy at 208.1 Buy at 208

Deal size

2000 shares 2000 shares

Initial outlay

£208.10

(Margin = exposure x 5% margin factor)

£4,160

(2000 shares at 208p)

Stamp duty

None £20

Capital gains tax

£72 £72

Close price

Sell at 229 Sell at 229

Profit

£346*

(20.9pt increase x 2000 shares = £418, less CGT)

 

*Not including commission fees

£328*

(4580 – 4160 = 420, less stamp duty and CGT)

 

*Not including commission fees

 

What are the technical differences?

A CFD is a financial derivative that enables you to trade on an asset’s price in the underlying market, without owning the asset itself. It is a leveraged product, meaning you only need to put up a fraction of the full value of the trade – or the ‘margin’ – to gain full exposure. Most CFDs don’t expire, though futures, digital 100s and options do.

When you deal shares, you take ownership of the shares in exchange for their full value. This means there are no underlying markets, no expiry dates and you may gain shareholder privileges. However, you will also pay stamp duty on each trade, and capital gains tax on any profits, except those made via a tax-free stocks and shares ISA or SIPP.1

 

The differences in detail

  CFD trading Share dealing
What is it? Trading a financial derivative – you deal on prices derived from the underlying market, not on the underlying market itself. The buying and selling of physical shares in a company.
Are there expiries? No expiry dates (excluding forwards, options and binaries). No expiry dates.
Do I pay tax?

You don’t pay stamp duty, but you do pay capital gains tax. However, losses can be offset as a tax deduction.

You pay stamp duty on each trade, and capital gains tax on any profits, except those made from trades using a stocks and shares ISA or SIPP.
When can I trade? We offer 24-hour trading on forex and major stock indices. During the underlying market hours for other markets. We also offer weekend trading on selected markets. Only when the related exchange is open.
Do I pay to keep positions open? Overnight funding on all markets, except futures. Rollovers on futures. No.
Does IG profit if I lose?  We profit primarily from commission, spreads and funding, and hedge the majority of net client exposure. We accept a low level of market risk, from which we can make a small profit or loss. The outcome of a client’s DMA trade never has an impact on our profit or loss. We make our money from the commissions you pay on each trade. The outcome of a trade makes no difference to our bottom line.
What kind of trading is it suitable for?

Intra-day

Daily

Medium-term

Long-term

Investing

Can I receive dividends? We make a dividend adjustment on equity and stock index CFDs. Yes.
Can it be used for hedging? Yes. Rarely, as other products are more effective. 
Range of markets More than 15,000 markets, including:

Forex

Stock indices

Shares

DMA forex

DMA shares

ETFs and ETCs

Metals

Energies

Spot metals

Soft commodities

Options

Binaries

Sprint options

Interest rates

Bonds

Sectors

Stock index futures

Share forwards

Forex forwards

Daily stock index futures

Daily oil futures

Shares and ETFs only, but more than 9000 from a range of stock indices in local denominations:  
                                                                         
UK indices including:

FTSE 100

FTSE 250

Other small cap UK stocks


US indices including:

S&P 500

NASDAQ 100

Other small cap US stocks


European indices including:

DAX

HDAX

MDAX

Irish ISEQ

Dutch AEX


 
The charges A spread on all markets except shares.
We charge a commission on share CFDs, but no spread.
Funding adjustments (excluding futures).
Commission on all trades.
A currency conversion fee on international shares.
Dealing platforms Desktop dealing 
Mobile app (iPhone, Android, Windows) 
Tablet app (iPad) 
DMA
MetaTrader 4
ProRealTime
Desktop dealing 
Mobile app (iPhone, Android, Windows) 
Tablet app (iPad) 
DMA
MetaTrader 4
ProRealTime
Direct market access (DMA) Yes, for forex and shares. Yes.

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1 Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.

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