Fair value definition

Fair value has two meanings to investors.

  1. Generally, it is used to mean the value attributed to a stock by an individual investor or broker.
  2. In futures trading, it can refer to the predicted price of a market which is reflected in the cost to open a position.

In many companies, the fair value of stock can be subject to much debate among investors. Technology companies that show promise but not profit can have fluctuating fair values from different brokers and investors, for example.

The fair value of a futures trade will reflect whether the seller believes that the market is going to go up or down before the futures contract expires.

At IG, futures bets and CFDs do not reflect this: the cost of the spread reflects the extra funding needed to keep the position open for the duration of the bet (and any dividend adjustments if you are trading equities).

A - B - C - D - E - F - G - H - I - L - M - N - O - P - Q - R - S - T - U - V - W - Y

See all glossary trading terms

Contact us

24 hours a day from 10am Saturday to Friday night at midnight.

010 344 0053

You can also email helpdesk.za@ig.com

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.