The vast majority of retail client accounts lose money when trading CFDs.
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Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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    How are dividends calculated and distributed in CFD trading?

    Table of content:

    Cash Dividend

    Stock Split or Reserve Stock Split

    Dividends

    Ex-dividend Date

    When trading a single CFD stock, there will be corporate actions enforced by the related company. An example of this is a cash dividend. If this has been issued, then ATFX will adjust the client’s account accordingly. ATFX will take two actions:

    Clients who hold BUY position(s) in a single stock CFD on the ex-dividend date will receive a positive cash amount which is equivalent to the dividend payout. (Deposits will be made into the client’s trading account according to their lot size and proportion of the dividend-paying underlying securities).

    Clients who hold SELL position(s) in a single stock CFD on the ex-dividend date will receive a cash amount that is equivalent to the dividend payout. (Withdrawal will be made from the client’s trading account according to their lot size and proportion of the dividend-paying underlying securities.)

    Adjustment Formula:

    Number of stocks * Dividend per stock = Adjustment amount

    (If the client account is denominated in USD, the adjustment amount will be converted to USD according to the spot exchange rate)

    Cash Dividend

    For example, if Apple Inc. (AAPL) announces a $0.01 USD cash dividend to its stockholders. On the ex-dividend date, Apple Inc.’s stock price would reflect the corporate action and would drop $0.01 in price. ATFX will make cash adjustments to clients who are holding open positions at Apple Inc. CFD.

    If an individual client of ATFX is holding 10,000 stocks of BUY positions, the cash adjustment will be calculated using the following equation: 

    10,000 stock CFDs x 0.01USD = 100USD cash dividend

    (Note: If a client is holding 10,000 stocks of SELL positions, ATFX will deduct 100 USD from the client’s account.)
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    Stock Split or Reserve Stock Split

    If a company announces a stock split or reserve stock split, the company’s stock price will be subject to significant change.

    Reserve Stock Split: CFD price will increase

    Stock Split: CFD price will decrease

    Open positions of the Apple Inc CFD. Should this not just say ‘clients who are holding open positions of the relevant CFD?

    However, a single stock CFD will also be affected by corporate action, which may occur when the listed company initiates any business changes Like a stock split, reserve stock split, or dividend payout, etc., and as a result, may affect the company’s financial position, its stock price performance, and the interests of stockholders.

    Dividends

    A listed company will announce its earnings reports semi-annually (or quarterly). Dividends are subject to approval by a company’s board of directors, and It’s a distribution of a company’s earnings to a specified class of its stockholders. Generally, dividends will be issued in the form of cash dividends or stock dividends. 

    Ex-dividend Date

    An ex-dividend is a stock trading term that specifies when a declared dividend is owned by the buyer as opposed to the seller. If an individual buys a stock before the ex-dividend day, he or she is then entitled to receive a dividend. If an individual buys a stock on or after the ex-dividend date, the buyer no longer has the right to receive the dividend. Investing in an undervalued stock not only has the potential to increase in value, but it also allows investors to reap the benefits of receiving dividends.

    Ready to trade CFD stocks with ATFX?

    With ATFX, you can test your strategies risk-free using our demo account, but you also have the option to open a live account when you're ready. Our MT4 platform offers all the major financial products paired with comprehensive training materials to assist you. Don't wait, start your trading journey today with your ATFX demo account and begin exploring the opportunities available in the markets. Your trading future awaits you!

    Last Updated: 05/07/2023

    This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


     

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