CFD Trading Training

Why Trade CFDs

Apply leverage

Gain greater exposure with less capital

Go long or short

Take advantage of all market movements

Diversify with ease

Trade a variety of markets and assets

In recent years, CFDs have become the most popular way for online investors to trade commodities, indices, currencies, and stocks. Since CFD trading does not involve the actual asset and operates independent of the market, it allows for greater flexibility than traditional trading for example, access to foreign markets, leveraged trading, fractional shares, and short selling.

How Does CFD Trading work?

When you open a CFD position you select the number of contracts (the trade size) you would like to buy or sell. Your profit will rise in line with each point the market moves in your favour.

Buy

If you think the price of an asset will rise, then you would open a long (buy) position and profit if the asset price rises in line with your expectations.

Sell

If you think the price of an asset will fall then you would open a short (sell) position and profit if it falls in line with your prediction.

What is leverage in CFD trading?

When you are trading CFDs, you hold a leveraged position. This means you only put down a part of the value of your trade and borrow the remainder from your broker.

Leveraged trading is also referred to as trading on margin. A 10% margin means that you have to deposit only 10% of the value of the trade you want to open. The rest is covered by your CFD provider.

Spread and commission

With CFD trading, you’re always offered two prices based on the value of the underlying instrument: the buy price (offer) and the sell price (bid).

The price to buy will always be higher than the current underlying value and the sell price will always be lower. The difference between these prices is called the CFD spread.

The Buy price (offer) is the price at which you start, or open, a long position.You close your position when you Sell.The Sell price (bid) is the price at which you open a short position.You close your position when you Buy

What are the costs of CFD Trading?

Spread: When trading CFDs, you must pay the spread, which is the difference between the buy and sell price. You enter a buy trade using the buy price quoted and exit using the sell price.

The narrower the spread, the less the price needs to move in your favour before you start to make a profit, or if the price moves against you, a loss. We offer consistently competitive spreads.

Holding costs: At the end of each trading day, any positions open in your account may be subject to a charge called a ‘CFD holding cost’. The holding cost can be positive or negative depending on the direction of your position and the applicable holding rate.

Market data fees: To trade or view our price data for share CFDs, you must activate the relevant market data subscription, for which a fee will be charged.

Commission (only applicable for shares): You must also pay a separate commission charge when you trade share CFDs.