A Contract for Difference (CFD) is an agreement to buy or sell a financial instrument (e.g. share or commodity) at a later date based on the price movement.
Your profit or loss is calculated by the difference between the price at which you buy the CFD and the price at which you sell that CFD.
At IronFX, investors can trade a wide range of CFDs on stock indices, bond and commodity futures using their friendly, innovative MT4 trading platform.
You can access and gain exposure to the underlying instruments – enjoy all the benefits of CFD trading from a single MT4 account!
Why Trade CFD Instruments with IronFX?
- Trade more than 140+ cost-effective CFD instruments
- No need to physically Buy or Sell the underlying instrument
- Leading MT4 trading platform for fast and reliable execution
- Trade CFDs on low fixed spreads with no hidden fees
- Low margin requirement – as low as 0.5 %
- 24-hour customer support
Example of how CFD Trading Works
If you decide to take a contract on US Light Crude Oil CL 1!, you will receive the following price from their system: $94.89 – $94.95.
If you wish to take a long position of CL 1! at the current ask price, your position will then be opened at the price of 94.95 which will require a margin of $750.
A commission of $12 / lot round turn will be charged when opening the position.
If you decide to close your US Light Crude Oil CL 1! position after the market rise, and the prevailing bid price is now at $99.05, you will accordingly make a profit of $4’100.00.
Your profit is calculated as follows:
|PROFIT ON TRADE|
|Formula: (Close Price – Open Price)/Tick Size*Tick Value) = P&L
Calculation: ($99.05-$94.95)/0.01*10= $4’100)
It is important to keep updated on the CFD instruments you are trading.
CFD prices can remain stable for considerable periods but are also subject to volatility in cases of important events such as natural disasters or fluctuations in demand/supply.
To help you with risk management in these situations, IronFX encourages you to use stop loss orders and ensure that your trades are closed at your requested level in all market conditions.