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In this section we offer an introduction to CFD (Contracts for Difference) trading and how it works, featuring examples and reasons to trade CFDs. We also discuss the related pricing and funding requirements.
|Introduction to CFDs||Trading CFDs||Pricing and funding|
|What is a CFD?How does CFD trading work?||Why trade CFDs?CFD marketsRisks of CFD trading||SpreadsCommissionMarginFunding and interestCurrency conversionOther fees|
Trading CFDs with IG provides a number of key benefits over other forms of trading:
Unlike many traditional forms of trading, including shares trading, it’s just as easy to potentially benefit from falling markets as rising ones when trading CFDs.
Some providers offer DMA, enabling you to trade directly into the underlying order book of equity exchanges worldwide.
Our commission rates start at just 0.1% of the contract value on some share CFDs.
Because you can trade CFDs on margin, you can potentially profit on short-term market volatility without having to put up a large initial investment.
We offer a huge range of markets at IG, including forex, shares, commodities, options, interest rates and more. Because you never actually own the underlying market, you can also trade on markets that would be otherwise untradeable, such as cash index products.
We offer round-the-clock trading on many markets, meaning that you can open and close positions even if the underlying market is closed.
With our award-winning online platform, you can open and close positions at the click of a mouse. Prices are live, and our automated systems can handle most transactions almost instantly - meaning less delay on opening or closing your position.
Some markets do have expiry dates built into the trade, but share CFDs do not. This means that you can close your share CFD positions whenever you like.
You can use leverage when trading CFDs. This means you only have to put up a fraction of the full value of a position to open a trade, allowing you to free up some of your capital for other uses.
Even though there is no physical purchase involved when trading CFDs, you still get full exposure to the underlying market that you are trading on.
We're proud to offer an enormous range of markets for retail clients to trade on. These include:
These are the most common and popular markets that you can trade CFDs on, but the list is vast, including a growing number of exchange-traded funds (ETFs), as well as the outcome of economic data releases.
Are CFDs risky?
The main risk with CFDs is market risk. This means that if the market moves against you, the value of your position will decline. This is the same risk you run with most traditional forms of trading.
However, CFDs are leveraged products, and this can significantly increase the risk of larger losses.
When you trade CFDs on margin, you get exposure to the full value of the contract for a fraction of the cost (the initial margin), but your potential profit and loss are based on the full value of the contract, not just the money you have paid. This means that CFD trading can result in losses that could exceed your initial deposit.
There are a number of ways to help you manage your risk and take a sensible approach to trading. View our managing risk module to find out more.