What is CFD trading?
CFD (Contract for Difference) trading lets you speculate on the price movement of an underlying asset (like FX, indices, shares or commodities) without owning it directly. You trade the difference between the opening and closing price of the contract: if you’re right about the direction, the difference is your profit; if you’re wrong, it’s your loss. CFDs are typically traded on margin, which means you only put up a fraction of the full value of the position, magnifying both gains and losses.
What is a CFD?
Put simply, a CFD is an agreement to exchange the difference in an asset’s value from contract open to close. In other words, CFDs let us offer electronic trading on any underlying asset such as gold and oil. We do this without the need to touch, store or exchange the underlying assets.
CFDs let you trade both long and short on your preferred markets. Firstly, this gives you the ability to profit from rising or falling prices. Secondly it enables hedging other assets. Also, you can trade with leverage to maximise your potential and benefit from our ultra-fast execution. What’s more, you can do all this with our institutional-grade low spreads.
Is CFD trading right for me?
CFD trading may be suitable if you:
understand how leverage, margin and volatility work;
can tolerate potentially rapid swings in profit and loss;
have the time and discipline to monitor and manage your positions.
CFDs are complex and high-risk products. If you’re unsure whether they’re appropriate for your financial situation, objectives and experience level, consider seeking independent advice and carefully reviewing the relevant risk disclosures before you trade.
What are the benefits of trading CFDs?
Some key benefits of CFDs include:
Access to many markets from one account – FX, indices, commodities and more from a single platform.
Ability to trade long and short – you can attempt to benefit from both rising and falling markets.
Leverage and capital efficiency – you only need to put up margin instead of the full value of the position.
These features give active traders a flexible way to implement their strategies. But the same leverage that makes CFDs efficient also makes them risky, so risk management is critical.
What are the risks of trading CFDs?
Main risks include:
Leverage risk – small price moves can create large profits or losses relative to your margin.
Market risk – sudden news or volatility can cause gaps and slippage, especially around events.
Margin call and close-out – if your equity falls below margin requirements, positions may be closed automatically.
Complexity – CFDs are not simple “buy and hold” products; they require ongoing monitoring.
You should only trade CFDs with money you can afford to lose, and with a clear risk plan for each position.
Is there an expiration date on a CFD trade?
It depends on the type of CFD:
Cash/spot CFDs on FX, indices and many commodities typically have no fixed expiry; they can be held as long as margin conditions are met, and overnight funding may apply.
Futures-style CFDs are based on an underlying futures contract and usually have an expiry date that mirrors that contract.
Contract Rollovers - For CFDs where the Underlying Asset is a futures contract, open Positions may be rolled into a Contract based on the next available futures contract prior to expiry. When this occurs, we will make an adjustment to your Trading Account to reflect the price difference between the expiring and new Contract, plus or minus transaction costs.
This may result in either a debit or a credit. The size of the adjustment will be displayed in your Trading Account once applied.
Traders often roll or close expiring positions before the contract expiry date to avoid unwanted delivery or adjustments.
What products/instruments can I trade with TabTrade?
TabTrade offers CFD products for trading. Our markets include:
Forex
Our deep FX liquidity lets you trade currencies with some of the lowest spreads and our highest leverage settings. Additionally, the forex market is open 24/5, making it perfect for scalping or running trading bots.
Indices
Profit on the broader market performance of global stock markets from a single instrument. Our zero commission indices allow you to trade even when the stock exchange is closed. As a result, you can take advantage of opportunities throughout the day.
Metals
Speculate on inflation or risk with safe-haven metals, or on industry and growth through base metals. Gold is widely considered a store of value, and Silver has many industrial uses which give it value.
Commodities
Trade short term moves in the crude oil price and geopolitics. Conversely, add longer term climate and seasonal trends in agricultural commodities to your trading. For something different, take advantage of supply and demand trends in base metals.
Shares
Trade the biggest names from the major exchanges such as the Nasdaq and NYSE with the flexibility of professional leverage.
Cryptocurrencies
Keep trading through the weekend with our crypto products. This lets you capitalize on the volatility of digital assets while the traditional markets are sleeping.
What is the difference between forex CFDs and forex trading?
“Forex trading” is a broad term for trading currency pairs. This can be done:
via spot FX or forwards with banks and institutional venues, or
via forex CFDs with a broker.
When you trade forex CFDs, you:
trade a leveraged derivative contract rather than the underlying interbank market directly;
can typically trade smaller contract sizes with lower capital outlay;
may face specific overnight funding, execution and margin terms set by the broker.
The underlying price reference is similar, but the product structure and terms are different.
What is the difference between share CFDs and share trading?
With share CFDs you:
speculate on the price movement of a stock without owning the actual shares;
trade on margin and can go long or short;
pay or receive adjustments for things like dividends and corporate actions rather than directly receiving shareholder entitlements.
With direct share trading you:
buy or sell the actual shares on an exchange;
usually pay the full value of the position (unless using margin lending);
may receive voting rights and dividends directly as a shareholder.
Share CFDs are more flexible for leveraged trading and shorting, while direct share ownership is usually more suited to longer-term investment.
Can I open both long and short positions on CFDs?
In general, CFD products allow traders to take both long (buy) and short (sell) positions, depending on the market and local regulations. This means you can attempt to benefit from both rising and falling prices.
On rare occasions during extreme volatility (such as during a major crash event), an exchange may ban short selling. In that case TabTrade must comply with regulations and comply with the ban. If this kind of event occurs, it will be communicated via our website, via email or via social media. If you are not able to take a long or short position and do not understand why, simply contact out support team and we will clarify for you.
How are dividends and corporate actions handled on CFD positions?
Corporate Actions:
lf a Corporate Action occurs in relation to an Underlying Asset of a CFD, we may determine and apply an adjustment to your Trading Account or to the terms of your Contract. The purpose of the adjustment is to put you in an economic position as close as reasonably possible to that which you would have been in had the Corporate Action not occurred.
Dividends:
If a dividend is paid on a share or equity index Underlying Asset, a dividend adjustment may be applied in your Trading Account, where:
Long Positions will generally be credited with an amount reflecting the dividend, net of any applicable withholding or transaction taxes; and
Short Positions will generally be debited with an amount reflecting the dividend.