Basics · 6 min read · Updated 20 May 2026
CFDs versus real shares: which one are you actually buying?
The same stock can be traded two very different ways. The difference affects your risk, your costs and your rights.
When you tap "Buy" on a platform, you may be purchasing a share that is registered to you at a custodian, or you may be opening a contract for difference (CFD) with the broker. Both show the same chart. Only one gives you the share.
Real shares
- You own the security and receive dividends directly
- No leverage by default, so you cannot lose more than you paid
- Held at a custodian, protected if the broker fails
- Costs: commission and conversion, sometimes custody
CFDs
- A contract with the broker that tracks the price
- Leverage is built in, which magnifies gains and losses
- You can go short as easily as long
- Costs: spread and overnight financing
- Between 65% and 80% of retail accounts lose money, according to the disclosures brokers must publish
How to tell which one you are using
Look for the words "CFD", "leverage" or "margin" on the order ticket. If the platform shows a multiplier like x5 or x20, it is a derivative. Platforms such as Northgate Markets offer both and label them clearly; others only offer one.
This guide is general information, not financial, tax or legal advice.