CFDs

A contract for difference (CFD) is a derivative product which enables you to trade on the price movements of underlying financial assets (such as forex, indices, commodities, shares and treasuries). It's an agreement to exchange the difference in the value of an asset from the time the contract is opened until the time it's closed.

With a CFD, you never actually own the asset or instrument you're trading, but you can still benefit if the market moves in your favour, or make a loss should the market move against you.

Trading CFDs involves trading on leverage, which means that you can enter a position with a set initial deposit, known as the margin requirement. It's important to remember that leverage amplifies your gains and losses in equal measure, based on the full value of the trade, and not just the initial margin amount.

The main difference between CFD trading and share trading is that you don't own the underlying share when you trade on a share CFD. With CFDs, you never actually buy or sell the underlying asset that you've chosen to trade, but you can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional share trading, you enter a contract to exchange the legal ownership of the shares for money, and you own this equity.

When trading CFDs, it's important to understand the risks associated with financial trading in general, as well as the risks that are specific to trading CFDs. The main risks associated with trading CFDs relate to trading with leverage, account close-out, market volatility and market gapping.

With CFD trading, you can take a position on both sides of the market. You would go long (or place a buy trade) if you believe the instrument will rise; or go short (place a sell trade) if you think the instrument will fall in price. Short selling is a strategy used by traders who want to take advantage of falling market prices.

As a retail (non-professional) trader, any losses you make are limited to the available cash in your trading account, thanks to negative balance protection.

However, it's important to remember that as you're trading on leverage, your profits and losses are based on the full value of the trade, and not just your initial margin requirement.

It's possible to make a profit when trading CFDs. However, due to the risks involved, it's very important to create and test a trading plan, which includes a robust risk-management strategy. You can practice trading on a demo account until you feel ready to trade with real money. View our trading guides for more information.

You can calculate your holding rate by following these steps:

• Take your total trade value using the opening price (calculated by multiplying your position size by the opening price), which is displayed in the order ticket when you enter a quantity.

• Multiply that by the holding cost percentage (which can change each day) shown in the 'Product Overview' to get your annualized holding fee.

• Divide this number by 365 to calculate your daily cost in the instrument's traded currency.

You can find holding rates from the product library in the platform. Select the arrow icon next to the specific instrument which will bring up a sub-menu. Then choose 'Product Overview' on the sub-menu to bring up the holding rate details.

Yes you can. Once you've logged in to the trading platform, select the 'Accounts' tab and then 'Positions'. From here you can see your separate position clusters, or an amalgamated total with your average entry price.

Commissions are typically charged on CFD trades of global shares, with the exception of US and Canadian shares, which are commission-free. Commission is taken out of the cash balance on your account when you open and close a position.

To trade a share CFD or view the price data for that share, you'll first need to activate the market data subscription for the applicable country or group of countries that the share is based in. Depending on the country, there may be a monthly fee for the market data subscription.

The monthly fee, if applicable, will be debited from your account at the time you activate a market data feed. Please note that the market data fee for the full calendar month will be charged, irrespective of whether you activate or deactivate the market data subscription part way through the calendar month.

The market data fee will be converted into your account currency at our prevailing currency conversion rate, before being debited from your account. It's your responsibility to ensure that you have sufficient funds in your account to pay any market data fee.

You can view the current market data subscription fees from the settings menu in our trading platform.

You can view the current market data subscription fees from the settings menu in our trading platform. For the vast majority of countries, there is no charge for activating the subscription. Learn more about market data subscriptions