Trade CFDs Online | FXTRADING.com - International

Trade CFDs Online

CFDs on Metals, Commodities & Stock Indices

Contracts for Difference (CFDs) are specialised and popular Over The Counter (OTC) financial products that allow you to easily take broad market positions in a variety of different financial markets including Stock Indices, Commodities, Metals, and more. With FXTRADING.com you can trade CFDs and Forex from the same platform login.

What Are CFDs? (Contract for Difference)

A contract for difference (CFD) is an established derivative instrument which has been popular for decades. CFDs are an over-the-counter (OTC) financial product and traded via a decentralised exchange, which allows the trading of live market prices without owning the underlying market.

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With the ability to trade long and short, CFDs are favoured by traders due to their low margin requirements and global market reach.

FXTRADING.com offers access to nearly 60 markets including forex, stock market indices, oil and metals, all within the same platform across all popular devices.

How Do CFDs Work?

CFDs allows traders to speculate on rising (bullish) and falling (bearish) markets. Whilst they are a derivative of an underlying market, you are not entering a contract or becoming an owner of any asset. You are simply placing a bet on the CFDs anticipated price.

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Long example: Buying the FTSE 100 (UK100 CFD)
A trader has a bullish view on the FTSE 100 (expects it to trade higher) so enters long position and buys five contracts at 6,275.

  • If the FTSE rises to £6,600 the trader could exit for a profit of around £1,625
    • (# contracts x contract size) x (exit price – entry)
    • (5 x 1) x (£6,600 – £6,275) = £1,625
  • If the FTSE falls to £6,150 the trader could exit for a loss of around -£625
    • (# contracts x contract size) x (exit price – entry)
    • (5 x 1) x (£6,150 – £6,275) = -£625
  • A 1% margin requirement with 100:1 leverage requires £313.75 of capital
    • (# contracts x contract size x price) / leverage
    • (5 x 1 x £6,275) / 100 = £313.75

 

Short example: Selling the Nasdaq 100 (USTEC CFD)
A trader has a bearish view on the Nasdaq 100 (expects it to trade lower) so enters short position and sells three contracts at $9,965.

  • If the Nasdaq falls to $9,500 the trader could exit for a profit of around $1,395
    • (# contracts x contract size) x (exit price – entry)
    • (3 x 1) x ($9,500 – $9,965) = $1,395
  • If the Nasdaq rises to $10,200 the trader could exit for a loss of around -$705
    • (# contracts x contract size) x (entry price – entry)
    • (3 x 1) x (£9,965 – £10,200) = -$705
  • A 1% margin requirement with 100:1 leverage requires £298.95 of capital
    • (# contracts x contract size x price) / leverage
    • (3 x 1 x $9,965) / 100 = £298.95

 

Costs Associated With CFDs
Transactional costs at FXTRADING.com are very competitive and are usually made up of the spread and swaps. A spread is a relatively small transaction cost applied to when a trade is entered, whereas the swap is an overnight holding costs usually derived from a countries interbank rate.

Spread:
The spread is simply the difference between the bid and ask prices. You can see the spread of the market within MT4 via the ‘Market Watch’ window and the deal ticket when you place a trade.

When a trade has been opened it will initially show a negative balance, as the transaction cost has already been applied upon entry. The market will need to move in the trader’s favour to bring the trade to break even. However, as spreads are highly competitive and tight at FXTRADING.com, the transaction costs is relatively minor.

For example:

  • If the Euro Stoxx 50 (STOXX50) shows a Bid/Ask of 3350/3351
  • The spread is 1-point (3350 – 3351)

If an open trade is risking €1 per point, then the transaction cost of entering the trade is €1. If an open trade is risking €10 per point, the transaction for the trade would be €10 using the above example.

Please note that spreads are variable depending on the amount of liquidity in the market. This means we’d typically expect tighter spreads when the exchanges are open, particularly when US and Europe are trading as this overlap session provides the highest trading volumes throughout a 24 hour period.

 

Swaps:
Swaps are a small overnight funding charge for CFDs, and the calculation is based upon the interbank rate of the currency in which the CFD is traded in.  Swaps can be both positive (a finding charge) or negative (a reimbursement) depending on what the interbank rates are and if they trader is positioned long or short.

For example, US indices such as S&P 500 are traded in USD, so the US interbank rate is used in the calculation. Whereas the ASX 200 would use Australia’s interbank rate.

Whilst there are only 5 trading days in a week, swaps are calculated daily for a calendar week of 7 days. For Indices, swaps are usually charged daily between Monday to Thursday, yet on Friday the swap is calculated for 3 days to account for the weekend.

Yet with forex markets have a triple swap calculated on Wednesday, as the underlying spot market typically settles two days later, so Friday’s weekend swap charged are therefore calculated on the prior Wednesday.

Advantages of Trading CFDs

  • Low margin requirements
  • Trade both long and short positions
  • Trade live market prices without owning the underlying asset
  • Hedge a portfolio or a CFD of the underlying market
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Low Margin Requirements
CFDs are a leveraged product, which allows you to deposit a much smaller amount than the value of the underlying market. For example to access $5,000 of exposure to a market with 1% margin, only $50 is required as deposit to place the initial trade.

Margin Example: Long 1x WTI contract at $35.75

  • 1 WTI contract = 100 barrels
  • Leverage = 100:1
  • Margin required = $35.75 (100 x 35.75) / 100

With just $35.75 in collateral, the price fluctuation of 100 barrels are effectively being traded. Without leverage, the margin requirement would have been $3,575.

However, traders can reduce their exposure by trading a partial contract such as 0.1 (or 10 barrels of oil).

Taking the above example means it would require just $3.58 in margin to control 10 barrels of oil at $35.75 with 100:1 leverage: (10 x 35.75) / 100 = $3.58*

* rounded up to the nearest cent

Trade live market prices without owning the underlying asset
With FXTRADING.com you gain access to live market pricing without having to pay for a price feed. Yet whilst you are trading live market prices, you do not own the actual instrument from which the CFD is derived from. So whether you trade oil, metals or forex, you are not entering a contract to own the underlying asset yet you are still free to speculate on the market’s direction.

Hedge a Portfolio or a CFD of the Underlying Market
If an investor owns a group of equities, they could hedge out some of the market risk by placing a short trade on a related index. For example, they may be long several FTSE 100 stocks but are concerned that volatile trading conditions and a risk-off environment will continue to weigh on their portfolio. So instead of closing their positions, they initiate a short position on the FTSE 100 index (UK100 CFD). If the broader market continues to fall, the FTSE short would be in profit and negate some or all of the losses from their share portfolio. If the broader market rises, their hedged short FTSE position would lose money, yet their stock portfolio could rise. In which case, the investor decides to close out the hedge.

Why Trade CFDs with FXTRADING.com?

  • Trade FX, indices, metals and oil within one platform
  • Competitive pricing
  • Low margin requirements
  • Trade partial contracts
  • No dealing desk intervention
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Trade FX, Indices, Metals and Oil from The Same Platform
Keep your finger on the pulse with nearly 60 global markets to trade from the same platform.

Competitive Pricing
Transaction costs matter, particularly for intraday traders. We keep transaction costs low by offering raw price spreads sourced from institutional-grade liquidity providers.

The two main transactional costs to open a CFD trade are the spread (difference between the bid and ask price) and swaps (overnight holding costs).

No Commission:
No additional commission is added to CFD trades for indices, commodity or FX standard accounts. Traders simply pay the spread (the difference between the bid and the ask price).

Low Margin Requirements
FXTRADING.com offers generous leverage for CFD markets to provide lower margin requirements for traders. This allows portfolio managers to better diversify and increase their exposure, or allow traders to reduce margin and help steer clear from margin calls.

Partial contracts
Unlike a futures exchange, we don’t require contracts to be traded in full. By offering partial contract trading (such as 0.1 or 0.01 of a full contract) it allows traders to calculate their risk with greater precision or reduce their overall exposure to an underlying market.

No Dealing Desk
FXTRADING.com are here to facilitate your trading. That’s it. With no dealing desk intervention, traders can rest assured we won’t provide re-quotes or acts of price manipulation against your trades.

What CFDs Can I Trade?

FXTRADING.com offers access to nearly 60 markets including FX, stock indices, oil and metals, all within the same platform across all popular devices.

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Forex is a 24-hour market with a staggering daily turnover of around US $5 trillion. With ‘open all hours’ access, its suited to traders across all time zones and all trading styles, whether it be technical, fundamental, intraday trading or longer-term investing. Trade FX with FXTRADING.com and take advantage of our tier-one liquidity providers and fast execution.

Indices are a basket of stocks, usually grouped together by country, business sector or size. Popular with day traders, swing traders and position traders, they provide easy access to a broad directional view of equities without the volatility of individual stocks. Open an account with FXTRADING.com to access global benchmarks across North America, Europe and Asia.

Commodities are the only capital markets that are physically bought and sold in exchange for currency, so they go hand in hand with FX markets. Gain easy access to spot commodity prices for gold, silver WTI and Brent with tight spreads and fast execution, without the issues that expiration and rollover of futures contracts bring.

Gold is a versatile precious metal and has stood the test of time as a form of currency for around $5,000 years. Considered a store of wealth, hedge against inflation and a safe-haven asset, gold remains a trader’s favourite regardless of timeframe or trading style.

Silver is gold’s cheaper yet more volatile little brother. Whilst they share a positive correlation over the long-term, silver’s high level of volatility appeals to traders. As the saying goes, gold is to hold, silver is to trade. Trade Silver with FXTRADING.com with leverage up to 100:1.

Oil (or black gold) is a key input for inflation and geopolitical tensions. This means oil markets are closely watched the world over due to its volatile nature and potential for explosive moves. FXTRADING.com offers access to both WTI and Brent crude with low margin requirements and partial contract trading.

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