What are CFDs
CFD stands for Contract For Difference. This type of financial instrument allows you 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 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 us to emphasize that you don’t own the asset you trade. AvaTrade was 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.
- Large variety of CFD instruments – Trade commodities, indices, ETFs, stocks, bonds and cryptocurrencies like Bitcoin and Ethereum CFDs.
- Powerful Platforms – Manage your trades manually or use our automated trading.
- Leveraged Trading – Up to leverage on various CFDs.
- Master your trading skills – Expand your horizons by entering our educational materials & daily updates.
- Best in class customer service – 24/5 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. Just like in other trades, 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 sell the CFD.
Naturally, like any type of trade or investment, wrong predictions can lead to loss of money, and one should be aware of the risks involved in CFD trading. There is plenty more to learn about the trading of CFDs, and you can learn more by browsing through the education section, in which you can watch video tutorials, read articles, get news updates, and more. Some more information on CFDs and their advantages can be found here.
How to trade CFDs with AvaTrade
- Trading Platforms
AvaTrade presents to its clients various trading platforms, for manual as well as automated trading. Providing different features and tools, our clients can find a platform which is the most convenient for each of them to use. We also offer the option of opening a demo-account, so you can practise trading on those platforms before you start trading with your own money.
- Leveraged Trading
Leverage is given by the broker to enable 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 also losses can be enhanced.
How Much Will it Cost to Trade CFDs
AvaTrade does not charge any exchange fees or commission and offers tight spreads on open positions. Spread is the difference between the sell and buy prices of a certain instrument. When calculating a cost for a position, you need to multiply the spread by the size of the position. This is the spread charged for 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 offered leverage and spreads for all CFD instruments on our Trading Conditions & Charges page on the website.
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 market will go and want to start trading – it’s time to join AvaTrade and enjoy the best CFD trading experience!
Open an account now to enter the markets, or try our risk-free demo account.