Trading Basics

What is a CFD?

CFDs (Contracts for Difference) offer leveraged long/short trading on almost every financial instrument. It is an inexpensive trading option to trade the change of price in multiple commodity and equity markets, with leverage and immediate execution.

A CFD is a Contract agreed between you and your broker to exchange, at the closing of the contract, the Difference in price between the opening and closing price of the underlying instrument. This means that in CFD dealing, you do not physically buy or hold the underlying asset; you trade a contract whose value captures every change of the price of the underlying asset.

Markets.com offers a wide range of CFDs giving you access to commodity markets - such as Oil, Agriculture and Precious Metals – and worldwide equity markets indices – such as FTSE 100, Dow Jones 30, S&P 500 and Hong Kong Hang Seng Index.

What is CFD Trading?

CFDs are dealt on a margin basis and you secure the transaction by paying a deposit. This means that when you open a position, you do not have to pay for its full value. Instead, you put up a deposit from 1% to 2% (depending on the contract’s margin requirement), which enables you to trade up to 100 times your initial capital (leverage of up to 100:1).

You are required to keep funds in your account to cover the transaction amount of each CFD and any associated costs if the price moves unfavorably. The margin requirement must be maintained to keep your position open. Should the equity value of the account drop below the minimum margin requirement, additional funds must be added.

CFD trading examples.

You funded your Markets.com Trading Account with a $2,000 initial deposit.

You are considering investing in the US Equity Market and below are the trading conditions of some US Equity CFD Indices:

Instrument NameContract SizeLeverage (Approximately)
S&P 5001100:1
DJ 301100:1

USD interest rate is charged at 4.0%.

CFD Positions left open overnight incur a financing charge against the whole amount of the position at a rate of +/ -1.5%.

Trading CFDs carries risk and could result in the loss of your deposit, please trade wisely. Read full Risk Disclosure.
Please note that the materials are offered for promotional purposes and do not entail any obligation to purchase investment services from the firm.