This is a small difference in the buying and selling price of the CFD. When a trader enters a CFD Broker, the online account will immediate shows a loss equal to the size of the spread. Therefore, if the broker charges a range of 10 cents, the trade will quickly show a loss of 10 cents when the business is opened. The share will have to appreciate by 10 cents to break even, and any appreciation after that will be pure profit.
As long as the trader holds the stock and the price continues to increase and reaches a rate of 25.76 USD the 100 shares can be sold for a profit of USD 50 within a matter of a few days if not hours — and all for a small deposit of USD 126.30 instead of USD 2526!
The fact that the CFD brokers offer so much leverage, allowing traders to trade vast amounts of stock with a relatively small number of money, make CFDs a much sought-after business.
Dealing Desk or No Dealing Desk
If the broker you are considering is trading tour orders through a dealing desk, there is every possibility that the broker is manipulating the CFD prices. A non-dealing desk broker allows his traders to trade directly on a conventional network. This allows for transparency and traders can trade at prices every trader is trading at.
A straight through process (STP) or an ECN (Electronic Currency Network) is another guarantee that the broker is not manipulating the trades. One way to tell if the broker is not trading through a dealing desk is to note whether or not the broker is charging a spread or a commission.