CFD trading with IG

CFD stands for ‘contract for difference’, a type of derivative product that you can use to speculate on the future direction of a market’s price. When trading via CFDs, you don’t take ownership of the underlying asset, which means you can take advantage of rising and falling markets by going long or short.

Learn more about what CFD trading is .

First, learn more about CFD trading via IG Academy or our demo account. Once you are confident enough, and familiar with the risks, you can open and fund a CFD account , choose which market you want to trade and do thorough analysis of the asset. When you’re ready to trade CFDs, you’ll just need to choose your position size and implement your risk management strategy.

Learn more about how to start trading CFDs .

The main way we make money is through the spread that we wrap around the underlying market price. The cost of trading is already factored into these two prices, called the offer and the bid, which means that you’ll always buy slightly higher than the market price and sell slightly below it. Share CFDs are generally priced slightly differently from other CFD markets. Unlike many other CFD providers, we do not wrap our own spread on top of the market spread. Instead, we take a small commission fee when you open and close the trade.

Learn more about our charges .

We do not aim to profit if a client loses, and our business model is based on providing a fair experience to all traders.

Learn more about how we make money .

Most CFD trades don’t have an expiry. However, it’s important to remember that all spot positions left open after 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.

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

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.

You can open a position that will become profitable if one of your other positions begins to incur a loss. An example of this would be taking out a short position on a market that tracks the price of an asset you own. Any drop in the value of your asset would then be offset by the profit from your CFD trade.

To find out about using CFDs for hedging, read our guide on hedging here.

We do not give tax advice, but we’ve included some details here to guide you. Generally, CFD trades in the UK are exempt from stamp duty. Most traders will pay capital gains tax, but with CFDs this can be offset against losses. It’s important to remember that tax law may differ in a jurisdiction other than the UK. These laws are subject to change and depend on individual circumstances.

When you trade CFDs, you buy a certain number of contracts on a market if you expect it to rise, and sell them if you expect it to fall. The change in the value of your position reflects movements in the underlying market. You can close your position any time when the market is open.

Futures , on the other hand, are contracts that require you to trade on the expected future price of a financial instrument. Unlike CFDs, they specify a fixed date and price for this transaction – which can involve taking physical ownership of the underlying asset on this date – and must be purchased via an exchange. The value of a futures contract depends as much on market sentiment about the future price of the asset as current movements in the underlying market. It’s worth keeping in mind that with us you can speculate on the price of futures contracts without buying the contracts themselves.

CFD positions do not have an expiry date on most markets, so can be held open for as long as you choose to maintain your position. The main CFD markets that have an expiry date are futures and forwards, and options . However, overnight funding fees will be incurred if spot positions are left open after 10pm UK time.