If a stock has a price of $30 and 100 shares are bought at this price, the cost will be $3,000. With a traditional broker, using a 50% margin, the trade would require at least a $1,500 cash outlay from the trader. With a CFD broker, often only a 5% margin is required, so this trade can be entered for a cash outlay of only $150.
It should be noted that when a CFD trade is entered, the position will show a loss equal to the size of the deal. So if the spread is 10 cents with the CFD broker, the stock will need to appreciate 10 cents for the position to be at a breakeven price. If you owned the stock outright, you would be seeing a 5-cent gain,and that's called the tradeoff.
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