Costs of trading CFDs

Here you will learn about the costs associated with CFD trading, including situations when you will pay a commission for CFDs, which markets are commission-free, how overnight financing works, and more.

1. Commission vs. Financing
2. Overnight Financing
3. Rolling CFD Futures

Commission vs. financing

When trading CFDs, there are two main methods for charging costs when opening or closing a trade: commission or spread. Which method applies depends on the type of assets you are trading:

• Indices and Commodities: These markets do not require a commission. Instead, you only pay the spread, which is the difference between the buying and selling price.

• Stock CFDs: A commission is charged for these positions, which is calculated based on the total value of the trade.

What is a CFD commission?

A CFD commission is typically charged when opening and closing a position on a Contract for Difference (CFD) on stocks. The amount of the commission you pay depends on where your stock is listed. There is also a minimum commission. For most stocks, the fees are as follows:

Example of CFD commission

Let's say you want to buy 250 Walmart CFD shares, with the stock price at 135 USD. The total value of your position would be (250 * 135 USD) = 33,750 USD. Walmart has a commission of 1.8 CPS, so you would pay (1.8 * 250), which equals 4.5 USD. Since this amount is below the minimum threshold, you will pay the minimum commission of 10 USD.

Spreads on CFDs

You trade based on the bid price to sell the market.

You trade at the ask price to buy the market.

The spread is the difference between the sell and buy price. For asset classes without commission, the spread is essentially your cost of trading on the market. The tighter the spread, the faster the trade can potentially move into profitable territory.

For stock CFDs, the spread simply reflects the difference between the buy and sell price of the underlying market.

Overnight financing

Overnight financing is a fee you pay for keeping a CFD position open for longer than one day. Essentially, it’s an interest charge to cover the cost of leverage you’re using overnight. You can also think of it as a carrying cost.

For CFDs with an expiration date (forwards), no financing fee is charged. Instead, these contracts have wider spreads because the carrying costs are included in the price.

Overnight financing is charged at your instrument's base rate + 2.5% for long positions. Alternatively, for short positions, you will "receive" a rate of -2.5%. The percentage is calculated based on the size of your trade at the end of the day and divided by 365 to obtain the daily rate.

Here are the reference rates for markets in EUR, GBP, JPY, SGD, and USD:

However, if the base interest rates are low, for short positions, instead of being paid, a daily financing fee will be charged to you.

Example of CFD financing: 

Example of CFD Financing: Let's say you decided to buy three CFDs on the UK 100 at 7310. The trade performs well and its price rises to 7340 by the end of the day. However, it is still far from your target price of 7380. You decide to leave the position open overnight.

The value of your position at the end is (7340 * 3) = 22,020. To calculate your overnight financing, add 2.5% to the current SONIA rate, multiply this percentage by 22,020, and then divide the result by 365.

If the SONIA rate is 0.25%, then:

0.25% + 2.5% = 2.75% 2.75% * 22,020 = 605.55 605.55 / 365 = 1.65 GBP

Your overnight financing fee will be 1.65 GBP, which will be converted to your account's base currency.

Rolling CFD futures

When futures contracts approach their expiration, you have the option to roll your trade into the next contract, if you wish. This process can be done by checking the automatic rolling option on the order ticket. For this transfer, you will pay half of the spread.

If you are long, your position will be closed at the middle price and then opened in the next contract at the buying price.

If you are short, your position will be closed at the middle price and reopened at the selling price in the next month.

Rolling into the next contract is cheaper than manually closing and reopening a trade. When you manually close and reopen a trade, you pay the full spread, while with "rolling," you only pay half.

For example, if you decided to roll your long March CFD position in XYZ into the next contract, you will save on costs by paying only half of the spread.

At the time of rolling, the price of the March contract is 630 / 635, and the price of the June contract is 640 / 645. Your long CFD position is closed at the March middle price of 633 and automatically reopened at the June buying price of 645.

Any profit or loss from this transaction will be automatically recorded on your account.

If you were to close the trade manually, you would close the position at 630 and then reopen it at 645, paying the wider spread. Rolling saves you costs because you only pay half of the spread.