CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
Over 40-years' heritage
Over 185,000 clients worldwide
15,000 markets worldwide

What are the risks?

Trading CFD's gives you exposure to thousands of underlying financial contracts, while not trading the physical contracts themselves.

Watch our five-step video guide to managing risk, or see below for more details on limiting your exposure.

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 derivative products that calculate the value of the contract based on an underlying financial instruments price movement.

 

CFDs are not suitable for everyone, and it is important that you fully understand and remain aware of the risks involved, that you have adequate financial resources to deal with them and that you monitor your positions closely. You have to read and understand the Risk disclosure notice before you apply to begin trading with us.

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

What can I do to control my exposure to risk?

  • Develop a trading plan, and stick to it

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

    Our trading skills 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 dealing in small sizes while you develop your understanding.

  • Understand the markets you want to deal on

    Ensure you understand the factors that influence different markets so you can base your dealing 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. or if the market ‘gaps’, moving sharply up or down with no trading in between. Gaps can occur overnight when prices change while the market is closed, or during the day in response to an unusual event.

    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 dealing on and exploring new dealing strategies.

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

    Attend one of our in-house seminars led by our professional staff or book a one to one meeting.

Open an account now

It's free to open an account, and there's no obligation to fund or trade.

You might be interested in...

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

 

Contact us

We're here 6 days a week Sun-Fri, from 8am to 7pm. Support is available 24hrs a day from Monday to Friday.

+971 (0) 4 559 2108

or contact us via email at: helpdesk.ae@ig.com

 

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.

See more detailed shares and forex examples.