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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved.

Benefits and risks of CFD trading

Buying or selling CFDs means you’re agreeing to exchange the difference in price of an asset from when your position is opened to when it’s closed. Find out the benefits, as well as the risks, of CFD trading – including leverage and short selling. Interested in trading CFDs with us?

Start trading today. For account opening enquiries call 1800 601 799 between 9am and 6pm (AEDT) weekdays, or email

Contact us: 1800 601 799

Start trading today. For account opening enquiries call 1800 601 799 between 9am and 6pm (AEDT) weekdays, or email

Contact us: 1800 601 799

Why trade CFDs?

CFDs enable you to:

  1. Make capital go further with leverage
  2. Go short or long
  3. Trade a huge range of markets
  4. Mirror trading the underlying market
  5. Hedge a share portfolio
  6. Access DMA

If you’re new to contracts for difference, start with our introduction to CFD trading and how it works.

Make your capital go further with leverage

When trading CFDs, you could stretch your capital further, as you only have to deposit a percentage of your trade’s full value to open a position. The deposit you’ll have to put down is called a margin. While this lowers the cost of opening a trade, it can also be very risky, as it’ll amplify your losses. This is because CFD profits and losses are calculated on the full size of your trade. Always take sufficient steps to manage your risk.

How much you’ll need to deposit depends on the size of your position and the margin factor for your chosen market. For example, many of our share CFDs have a margin of 20%, most major indices have a margin of 5%, cryptos typically have a margin of 50%, and most major forex pairs have a margin of 3.33%. Learn more about our CFD margin requirements.

For an easy way to find out the margin requirement for your trade – as well as the potential profit or loss – try out our CFD calculator. An example would be if you decided to trade CFD shares on BHP, which has a margin factor of 20%. In this case, a position worth A$1000 would only require a deposit of A$200.

A diagram showing how a leveraged CFD trade works. You’ll commit a smaller value of the trade – called margin – to get exposure to the full trade size.

However, it’s important to remember that your total profit or loss is based on the full size of your position, not your margin. So, in our previous example of BHP share CFDs, your potential for loss or profit would be based on the full A$1000, even though you only paid A$200 to open the position.

If you chose to invest in the shares outright, you’d have to open a share trading account. Leverage isn’t available with share trading (investing).

CFD trade Share trading
You deposit A$200 A$1000
Your BHP position rises to $1025 You'll make A$25, excluding any fees or charges You'll make A$25, excluding any fees or charges
Your BHP position falls to $975 You'll lose A$25, excluding any fees or charges You'll lose A$25, excluding any fees or charges

Go short or long

When you trade CFDs on our platform, you’ll see two prices listed: the ‘buy’ price and the ‘sell’ price. You’ll trade at the buy price if you think that the market is going to go up in price (known as going long), and the sell price if you think it is going to go down in price (known as going short).

If your prediction is correct, you will make a profit based on your overall position (not the initial margin amount you paid to open the trade), which can exceed the initial cost of your margin. However, if your prediction is incorrect and you make a loss, that loss is also calculated based on your total position size. This means that your losses can far outweigh the margin cost, so always ensure you are trading within your means and take appropriate risk management steps.

Trade a huge range of markets

With us, you can trade CFDs on more than 18,000 markets. This includes over 13,000 shares and ETFs, 80 of the world’s top indices, 30 commodities, more than 10 cryptos, all major, minor and exotic forex pairs and more.

You can even trade some markets outside of trading hours, to make the most of economic and political events and announcements. We have pre-market and after-hours offerings available, so you can trade long before and after the main market session on our All Session stocks.

Just keep in mind that the market’s opening price may differ from its out-of-hours price and trades opened and not closed by 9am AEDT (10pm UK time) will incur overnight funding charges.*

*International times may vary

Mirror trading the underlying market

CFDs are designed to mimic trading their underlying market fairly closely. This means you simply buy and sell CFDs as you would the underlying asset. For example, buying an Apple share CFD is the equivalent of buying a single share in Apple – if you want to buy the equivalent of 2000 Apple shares, you’d buy 2000 Apple CFDs.

Buying or selling a forex CFD, meanwhile, is equivalent to buying a certain amount of base currency by selling the equivalent amount of quote currency. These are called lots and there are different sizes of lots for forex: standard, mini, micro and nano. The greater the lot size, the more money you’ll need to put down to open a position. So, buying a single CFD on the GBP/AUD exchange would give you the same exposure as buying £100,000 in Australian dollars for a standard lot, but £1000 with a mini lot. Find out more about lot sizes for forex.

With commodities and indices, market movements are directly correlated to the real-time price of that index or commodity.

Hedging your share portfolio

If you have other active trades or investments, you can use CFDs to hedge risk in both your leveraged and non-leveraged portfolios. Hedging means you strategically open new positions (such as CFD trades) to protect existing positions from unpredictable market movements or offset potential losses.

For example, let’s say that you owned BHP shares outright, but the price was starting to fall. You don’t want to sell your share investment, but you also don’t want to run the risk of the share price falling to a level that you’re uncomfortable with – which might represent a loss.

So, you open a short share CFD position on BHP (‘sell’ rather than ‘buy’) with the same size as your share investment. If the BHP share price falls, the gains on your short share CFD trade will help to offset a proportion of the losses on your share investment – without requiring you to sell your shares.

If you’re correct and your BHP shares drop in value, then your BHP CFD trade position would earn you a profit, offsetting your loss. If your BHP shares increase in value, you could close your CFD position.

A graph showing how a loss on a position can be offset by a profit in another. Opening two positions that counter each other is known as hedging.

Access DMA

If you’re an advanced trader, you can get direct market access (DMA).

Our DMA offering enables you to see and interact with the order books of stock exchanges. Instead of trading at the buy and sell prices offered by us, you can see all the available bid and offer prices at any time and trade at market prices you choose.

Using DMA means there’s no spread to pay because these trades are charged on commission. But, while DMA can be a powerful tool, there’s no guarantee that you’ll find prices that are better than the prices we offer.

DMA is only recommended if you’re an advanced trader with plenty of experience, due to the risks and complexities involved. Read about the risks of DMA before you consider this option.


Is there an expiration date on a CFD trade?

Most CFD trades don’t have an expiry. However, it’s important to remember that all spot positions left open after 9am AEDT (10pm UK time) will incur overnight funding fees. This is slightly different if you’re trading CFD futures – which allow you to speculate on the price that the underlying asset will be on a specific date, at which point the trade will expire. You won’t incur overnight funding on your CFD futures trades.

Can you hold a CFD position overnight?

Yes, you can hold CFD positions overnight. However, you’ll be charged an overnight funding charge on any positions still open after 9am AEDT (10pm UK time). This fee covers the capital you’ve effectively borrowed from us and reflects the cost of holding your position open.

What is the minimum contract size for a CFD trade?

CFD trades are standardised into lots, but each market has its own minimum number of contracts that aim to mimic how the asset is traded on the live underlying market.

For example, for share CFDs, the contract size is usually the equivalent of one share of the company you’re trading. For forex, there are standard lots which equal 100,000 units of the base currency, or mini lots that are equal to 10,000 units of the base currency.

What are the commission rates on CFDs?

For most CFD trades, the cost of opening your position is covered in the spread. This means the buy and sell prices already include any charges additional charges. However, for share CFDs you will pay a commission instead of our spread, which means that the buy and sell prices match the underlying market price as it is in real-time.

Can you trade both rising and falling markets with CFDs?

Yes. Trading CFDs means you can take a position on markets that are both rising and falling in value. You can ‘buy’ an asset in the hope that its price will rise (going long), or ‘sell’ the asset in the hope that its price will fall (going short).

Always take steps to manage your risk, as CFDs come with a high risk of losing money.

Develop your knowledge of CFD trading

Learn more about CFD trading and test yourself with IG Academy’s range of online courses.

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