Mon. Jun 5th, 2023

When it comes to investing in Singapore, various options are available. Investors can choose from stocks, mutual funds, exchange-traded funds (ETFs), and contracts for difference (CFDs). Each of these has its own set of advantages and disadvantages which need to be considered when making an investment decision.

Stocks are shares in the ownership of a company. When you buy a stock in Singapore, you become a part-owner of that company and receive a share in their profits or dividends. Stocks have the potential to grow significantly over time but also carry more risk than other types of investments, as their value can fluctuate greatly depending on market conditions. The key benefit to buying stocks is that investors can control their portfolios and buy and sell stocks as they wish.

On the other hand, CFDs are a type of derivative instrument. A CFD is an agreement between two parties to exchange the difference in the value of an underlying asset between the time of opening and closing a contract. Unlike stocks, CFDs don’t require investors to purchase or own any assets; instead, they only need to speculate on price movements for that particular asset. Investors who hold long positions benefit when prices increase, while those with short positions benefit when prices decrease.

The significant advantages of investing in CFDs compared to stocks include lower costs (as there are typically no broker fees associated with them), higher leverage (which allows investors to gain greater exposure for less capital) and greater flexibility (as investors can choose from a range of different assets). On the other hand, CFDs are riskier as they are leveraged instruments, and trades can be closed out to limit losses.

How to get started trading stocks and CFDs in Singapore

The process can initially seem daunting when trading stocks and contracts for difference (CFDs) in Singapore. However, anyone can become a successful investor with simple steps and basic knowledge about the stock market. Here are the steps to get started trading stocks and CFDs in Singapore:

Get acquainted with the basics of investing

Before investing, it is essential to understand the fundamentals of trading stocks and CFDs. Familiarise yourself with asset classes such as stocks, bonds, ETFs and derivatives like CFDs. Learn about different types of orders, such as limit orders, stop-loss orders, market orders etc., and how to interpret a stock chart. Reading up on current news that may affect stock prices is also beneficial.

Choose an online broker

It is essential to choose an online Saxo CFD broker that suits your needs best; this might depend on the type of assets you want to trade or access to advanced tools such as algorithmic trading strategies or automated portfolio management options. Most online brokers provide tutorials and support services to help new traders get started.

Open a brokerage account

Once you’ve chosen an online broker, you need to open an account before you can start trading stocks or CFDs in Singapore. The necessary documents required include proof of identity (ID card/passport) and proof of address (utility bills). After submitting these documents, your application will be reviewed before you can start trading.

Fund your account

You need sufficient funds in your brokerage account before you can start placing trades; some brokers may have minimum deposit requirements, so check beforehand if there are any conditions on funding your account for specific markets or products that require additional funds beyond what’s available in your account balance.

Start trading

Once your account is set up and funded, you can start trading. Educate yourself further on the markets; plenty of online resources will help guide new traders toward becoming experienced investors in Singapore’s financial markets.

Keep a trading journal

Finally, keeping a trading journal for every trade you make is essential, allowing you to track your progress and make adjustments as necessary. Over time, you should identify patterns in the data that can help inform future trades and strategies.


CFDs offer numerous advantages over stocks, such as lower costs and higher leverage, making them an attractive option for many investors. However, they are more volatile and riskier than stocks due to their leveraged nature. Therefore, deciding whether to invest in stocks or CFDs is essential to consider your preferences, financial goals and appetite for risk before committing any capital. Ultimately, both investments have the potential to generate returns if managed responsibly.

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