What are the risks?

Learn the risks associated with trading on the financial markets and how to manage them with our extensive range of tools and resources.

CFDs carry risk in the same way that any financial product carries risk – if the market moves against you, you lose money. However, the risks associated with CFDs can be greater because they are leveraged products.

What is leverage?

Leverage enables you to gain a large exposure to a financial market while only tying up a relatively small amount of your capital. In this way, leverage magnifies the scope for both gains and losses. 

Is leveraged trading risky?

Even though you only put up a relatively small amount of capital to open a position, your profit or loss is based on the full value of the position.

Therefore, the amount you gain or lose could be relatively large compared to your initial outlay.

Learn more about leverage

See more detailed shares and forex examples.

Can I control my exposure to risk?

Yes. We offer a range of tools to help you manage your open positions and control your risk exposure.

Develop a trading plan, 
and stick to it


A trading plan can help you clearly define and achieve your overall financial trading goals.

Our education section offers advice on how to define and adhere to a personal trading plan.

Start slowly, and build your skills and expertise

If you’re new to leveraged products, you can get used to how leverage works by trading in small sizes while you develop your understanding.

New clients can trade at reduced minimum trade sizes for two weeks and reduced commissions for six weeks with our introduction programme.

Understand the markets you want to trade on

Ensure you understand the factors that influence different markets so you can base your trading strategies on the most relevant information.

Our trading skills section covers each market we offer in great depth, and our experts provide regular data and commentaries in news and analysis.

Monitor your open positions

Ideally you’d be able to constantly monitor your open positions and react to market movements. Practically, however, this is often difficult.

Our platform is available via our free app, so you can monitor trades on your mobile or tablet. You can also set up price alerts to notify you when specific prices are reached.

Use stops and limits to protect against sudden market movements

Sudden market movements can cost you if you aren’t able to react immediately. Automated risk management tools can save you time and money.

Our risk management tools protect you from sudden market movements and let you lock in profits when the market moves in your favour.

These include stop losses, guaranteed stops, trailing stops and limit orders.

Keep learning

Improve your success rate by learning more about the markets you’re trading on and exploring new trading strategies.

Build your knowledge and expertise with our comprehensive Trading skills section, get an aggregated view of how IG clients are trading, and hone your skills with a free demo account.

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  • Explore our platform preview, risk-free
  • Search for your favourite pairs and open deal tickets
  • Access charts and technical analysis tools

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Open a demo trading account

  • Trade with $20,000 practice funds
  • Access charts and view live prices
  • Trade online or via our mobile apps

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Create an account

It’s free to set up your account and you can be ready to start trading in a matter of minutes.

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Buying Barclays plc light

Buying Barclays

  CFD
Underlying market/value Barclays Plc 289.85/290
Our price 289.56/290.29
Trade

Buy at 290

Trade size 2000 shares
Margin required

£580

Number of shares x price x margin rate (10%)

What happens next? The market rises steadily to 295.05
Underlying market

294.85/295.05

Close

Sell at 294.85

Gross profit

294.85 – 290 = 4.85p

Gross profit = 4.85p x 2000 shares = £97

What if...

If the underlying market fell to 282.25 instead, and assuming same costs:

-7.75p x 2000 shares

Gross loss = £155

 

Buying Barclays plc detailed

Buying Barclays: detailed

  CFD
Underlying market/value Barclays Plc 289.85/290
Our price 289.56/290.29
Trade

Buy at 290

Trade size 2000 shares
Margin required

£580

Number of shares x price x margin rate (10%)

What happens next? By 4.35 the market has risen to 291.95: this is the price our funding is calculated at. It rises steadily the next day, reaching 295.05
Funding

Overnight funding charge of £0.48

(One-month Libor + 2.5% eg 0.49% + 2.5%) x number of shares x price)/365

(2.99 % x 2000 x 2.9195)/365

Underlying market

294.85/295.05

Close

Sell at 294.85

Gross profit

£97

294.85 – 290 = 4.85p

4.85p x 2000 shares = £97

Costs

Commission £ 20

Value of position x 0.10% (Minimum £10)

(2000 x 2.90) x 0.10% = £5.8

(2000 x 2.9485) x 0.10% = £5.90

Funding: £0.48
Net profit

£76.52 profit subject to tax

What if...

If the underlying market fell to 282.25 instead:

282.25 – 290 = -7.75p

-(7.75p x 2000 shares + £0.48 + £20) 

£175.48 net loss

 

Example: buying cable (GBP/USD) detailed

Buying GBP/USD: detailed

  CFD
Market Spot GBP/USD
Price 1.55797/1.55805
Trade

Buy 1 contract at 1.55805 (1 contract = £100,000)

Margin required

One contract is £100,000 and the margin rate is 0.5% = £500

What happens next? GBP/USD climbs one hundred points into the next day. 
Funding

Funding = size x (tom-next rate + admin fee of 0.3% pa)

£10 x 0.25 = £2.50

Price

1.5695 - 1.56958

Close

You sell at 1.5695

Gross profit

£1145

1.5695 – 1.55805 = 0.01145

Number of contracts = 1

Value per contract £100,000

0.01145 x £100,000 = £1145
Costs

0.8 point IG spread (included)

Funding cost = £2.50
Net profit

£1142.50

What if...

If the market dropped 114.5 points instead:

£1145 + £2.50

Net loss = £1147

 

Example: buying cable (GBP/USD) light

Buying GBP/USD: detailed

  CFD
Market Spot GBP/USD
Price 1.55797/1.55805
Trade

Buy 1 contract at 1.55805 (1 contract = £100,000)

Margin required

One contract is £100,000 and the margin rate is 0.5% = £500

What happens next? GBP/USD climbs over one hundred points. 
Price

1.5695 - 1.56958

Close

You sell at 1.5695

Gross profit

Gross profit = £1145


1.5695 - 1.55805 = 0.01145

Value per contract = £100,000

0.01145 x £100,000 = £1145

What if...

If the market dropped 114.5 points instead:

Gross loss = $1145