Comparing CFDs to a weapon, their impact depends on how they are used—either for good or bad. Purely in terms of market movements and exposure, investing $100 of your own money in Real Stocks or using $20 of your capital plus $80 borrowed money (5x leverage) in CFDs should provide similar exposure before fees. However, the danger in CFDs trading arises when you place an order without fully understanding the implications. Using the previous example, you might mistakenly believe that your maximum exposure is $100, when in reality, it's just the 20% margin and not the full investment amount. With 5x leverage, your actual exposure would be $500 instead of only $100.
Hence, it's crucial to carefully examine all the details and potential risks before making any CFDs trades. Being well-informed can help you avoid potential pitfalls and make more educated decisions.