CFD Trading

what is cfd trading

What are CFDs

CFD stands for Contract For Difference. This type of financial instrument allows you to trade an underlying index, share or commodity contract without actually having to own it. The CFD price is the price of the underlying asset. So if the price of the underlying asset, eg. Gold or Facebook Stock goes up, so will the price of the CFD. Similarly, if the price of the underlying asset goes down, so will the price of the CFD. It is important to emphasize that you don’t actually own the asset you trade.

AvaTrade is a pioneering broker – we were one of the first online brokers to offer CFD trading, giving individual traders access to a large range of markets which were not accessible to them before.

Open a CFD trading account today and enjoy the benefits of an internationally regulated broker!

Why Trade with AvaTrade?

  • Trade with confidence – AvaTrade is an internationally regulated broker with dedicated trading websites. We have 7 regulations, across 6 continents.
  • Large variety of CFD instrumentsTrade commodities, indices, ETFs, stocks, bonds and cryptocurrencies like Bitcoin and Ethereum CFDs.
  • Powerful Platforms – Manage your trades manually via MT4/MT5 and WebTrader, or use our automated trading platforms.
  • Leveraged Trading – Use leverage on various CFDs to amplify your exposure to the markets.
  • Master your trading skills – Expand your horizons by making the most of our educational materials & daily updates.
  • Best in class customer service – Multilingual live support with a dedicated account manager.

What is CFD Trading?

CFD trading is quite similar to forex trading. When trading on the platform, you select the instrument you wish to trade and enter your order. If you think the price of a certain instrument, e.g. crude oil, will increase, you’ll want to BUY the crude oil CFD. The same goes the other way – if you predict the value will go down, you short sell the CFD.

Naturally, as with any type of trade or investment, wrong predictions can lead to the loss of money, and one should be aware of the risks involved in CFD trading before starting out. There is plenty more to learn about CFD trading, and you can browse through our education section, to watch video tutorials, read articles, get news updates, and more. You can find more information on CFDs and their advantages here.

How to Trade CFDs with AvaTrade

Trading Platforms

AvaTrade offers a variety of trading platforms, for both manual as well as automated trading. We supply a range of useful tools like the exclusive AvaProtect feature, which can help elevate your trading. We have a variety of platforms made for desktop, web and mobile too. We also offer you the option of opening a demo-account, so you can practice trading before you start trading with your own money.

Leveraged Trading

Leverage is a facility offered by some brokers which enables traders to hold trading positions that are larger than what one’s own capital would otherwise allow.

It is important to remember that the profits and losses are determined by the position size, and as leverage trading can magnify profits, it can also heighten losses.

Open a CFD trading account today and enjoy the benefits of an internationally regulated broker!

How Much Will it Cost to Trade CFDs?

AvaTrade does not charge any exchange fees or commission and offers tight spreads on open positions. The spread is the difference between the BUY and SELL prices of a certain instrument. When calculating the cost for a position, you need to multiply the spread by the size of the position. For example, if the spread for crude oil trading is $0.03 USD, the cost for opening a 10 barrel-position is $0.03 X 10 barrels = $0.3 USD.
Most of the CFD instruments are traded on market spreads, which means that the spreads are affected by the liquidity of the market. The more liquidity, the narrower the spread will get.

You can review the levels of leverage and spreads for all CFD instruments on our Trading Conditions & Charges page.

CFD Contract Rollover

Each index and commodity CFD is based on a contract defining its rates, charges, etc. Each of these specific CFD contracts has an expiry date, which is the date that the contract expires and automatically replaced by a new contract, just like the real market. In order not to disturb traders during market hours, the contract rollover takes place over the weekend.

For more information, you are welcome to visit our CFD Rollover page.

Start Trading CFDs with AvaTrade

If you think you know which way the markets will go and you want to start trading – it’s time to join AvaTrade and enjoy the best CFD trading experience!

Still not sure? Take a look at the Avatrade Reviews by our clients!

Register for a trading account now to enter the markets, or try our risk-free demo account.