Plus500 is one of the most popular CFD trading platforms in Australia. It’s definitely the one I see most advertised online. But is it actually a good place to trade stocks and other assets? Here are some of the reasons why I don’t think its a good fit for most people. If you’ve been thinking about signing up to Plus500, make sure you read this first.
You’re Trading CFDs
On Plus500 you aren’t trading real stocks. Instead you’re trading CFDs. These are basically just a contract that tracks the price of the underlying asset. While it will behave the same as a stock in terms of price, there are some additional risks.
The biggest risk on Plus500 is leverage…
Trades on Plus500 are leveraged. This means you’re using a smaller amount of capital to control a larger amount of an asset. This is risky. Trading with leverage, or margin means that you’re position could be liquidated if the price moves against you.
While leverage can be a powerful tool for professional traders – for amateurs it’s dangerous. It can also be really tricky to understand. Most people shouldn’t be margin trading. Leave that to the pros.
Contracts will Close
When you buy a stock, you now own that stock. You can hold it for as long as you like. On Plus500 your positions will close. Each contract you trade has an expiry. Your trade will close out automatically when the contract expires. If you’re currently down, you’ll lose money. You can’t hold onto the contract and hope the price will recover.
This means that Plus500 isn’t good for long term investing.
Plus500 for Crypto
You can trade Crypto on Plus500, but I also think its a bad place to do this. Remember on Plus500 you’re just trading a contract. You aren’t actually buying the underlying asset. Because crypto is so volatile, I think its smarter to just buy and hold. Trading is just too risky.
Can you buy shares on Plus500?
You can trade share CFDs on Plus500 but when you buy shares you don’t actually own them. You are just trading a contract. So if you’re looking to invest in shares for the long term, then Plus500 is definitely not for you. Plus500 could be used for day trading, but that is much more complex and not for the average investor.
Is Plus500 Worth it?
I don’t think Plus500 is worth it for most people. If you’re an experienced trader, then it might be a good platform for you. But if you’ve never traded before then I would highly recommend you look elsewhere.
Better Plus500 Alternatives
If you are looking to trade shares, forex and other CFDs – then here’s a platform which I think is better. If you’re just looking to buy and hold shares, then look for a broker or invest via micro-investing.
- You can trade without leverage – this means you won’t be liquidated when markets are volatile. Trades work just like regular stock trades.
- No holding fees – on non-leveraged positions, you aren’t charged any overnight or weekend fees.
- No Expiry – there are no expiry dates on stock contracts. This means you can buy a stock like Apple, and hold onto it for months and profit from longer term gains
- CopyTrading – you can copy the trades made by more experienced traders.
You can find out more about etoro here.
If you are looking to start trading, then I recommend you start with a practice account. You can open a practice account on Plus500. I recommend eToro as a good place to practice trade. Just because they have social features where you can interact with experienced traders.