Can you trade CFDs at Charles Schwab as of October 2023?
No, unfortunately, CFD trading is not available at Charles Schwab.
If you're looking for a CFD broker with low fees, a broad product selection, and favorable account opening and funding conditions, check out our list of the best CFD brokers in your country.
Charles Schwab is a US discount broker, regulated by top-tier US authorities the SEC and FINRA. The company is listed on the New York Stock Exchange and holds a banking license.
If you are still interested in opening a trading account with Charles Schwab, check out our detailed review, where we collected key information about account opening, platform features, fees and other conditions.
Alternatively, if you have already made up your mind to open an account at Charles Schwab, click the link below to head over to their site.
CFD trading in a nutshell
Before you continue your search for a CFD broker, it may be a good idea to go through the basics of CFD trading, so you're aware of the major benefits and risks.
CFD, which stands for Contract for Difference, is a type of trading instrument that allows you to speculate on the price movements of an underlying asset without actually owning it. In a CFD trade, you enter into a contract with a broker to exchange the difference between the opening and closing price of a particular asset. If you believe the price of the asset will increase, you can buy a CFD, and if you think it will decrease, you can sell a CFD.
The profit or loss you make is based on the difference between the opening and closing price of the CFD. If the price moves in your favour, you will make a profit, but if it moves against you, you will incur a loss.
What are the advantages?
CFD trading allows you to trade with leverage, which means you can potentially make bigger profits with a smaller amount of money. However, it's important to keep in mind that leverage can also magnify your losses.
CFD trading also allows you to trade on a wide range of markets, including stocks, commodities and currencies, which allows you to diversify your portfolio.
It is also a flexible tool. You can trade both long and short positions, meaning you can profit from both rising and falling markets. You also don't need to actually own the underlying asset you're trading, so it means you don't have to worry about storage or ownership costs if you own gold or oil, for example.
What are the disadvantages?
CFDs seem like a very accessible and flexible tool. But note that it is also a high-risk product that requires a thorough understanding of market conditions and in-depth expertise in trading. Make sure you understand that you could potentially lose more than your initial investment. Even if the high reward seems very attractive, be aware that CFDs are a complex trading tool and think twice before getting into CFD trading, especially if you are a beginner.
Also, when you trade CFDs, you don't actually own the underlying asset; this means you don't have any voting rights or other ownership benefits that come with owning the asset.
If you want to explore the topic further, we suggest you read our in-depth guide 'What is CFD?'
Looking for a CFD broker?
Do you want to find the brokers that offer the best CFD trading conditions? Thankfully, we have already done that for you. Check our selection of the top CFD brokers in the world.
If you need a more detailed side-by-side comparison of these brokers or any others you may have in mind, try our broker comparison tool.
If you have any feedback or questions, feel free to contact us via email!
Is CFD trading good for beginners?
CFD trading is highly risky and therefore not generally recommended for beginners, even as the small initial capital requirements involved in CFD trading may appeal to those who have just started trading. Trading CFDs requires a thorough understanding of margin trading and special risk management techniques such as stop-loss orders.
Are CFDs legal?
CFDs are legal in the EU, UK, Australia and many other countries around the world, but are typically heavily regulated. Such regulatory measures for CFDs include mandatory risk warnings, leverage restrictions, or requirements that brokers offer negative balance protection. CFDs are banned outright in the US and in a few other jurisdictions such as Hong Kong.
What is leverage?
When trading with leverage, you only need to deposit a certain percentage of your CFD trading position, with the rest borrowed from your broker. For example, in the case of 10:1 leverage, you would need to deposit only $1,000 to open a $10,000 trade. Leverage can amplify your gains, but also your losses - in extreme cases, a small drop in the price of the underlying asset can wipe out your entire initial investment.
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