CFDs on stocks, indices and commodities: how the terms change by asset class

A CFD on a share, a stock index or a commodity works on the same principle as a forex CFD: you exchange the difference in price between opening and closing a position, on margin, with your broker as counterparty. What changes from one asset class to the next is the small print: how big one contract is, what a one-point move is worth, how overnight financing is charged, whether dividends are adjusted, whether the contract expires, how much leverage a retail client can use and when the market is open. Those details decide what a trade actually costs and how quickly it can go wrong.

If you are new to CFDs, start with our guide to what is a CFD, which covers the basic mechanism, going long and short and the main risks. This guide assumes that background and focuses on the differences between asset classes. For the bigger picture of where CFDs sit among other products, see what are financial instruments.

The instrument specification is the contract

Every CFD has a specification sheet, sometimes called contract specifications or market information, in the broker's platform or website. It is the most important document for any new instrument, because it tells you:

• the contract size (how many units of the underlying one CFD represents);
• the point value or tick value (what one unit of price movement is worth, and in which currency);
• the minimum and maximum trade size and the size increment;
• the margin requirement for retail clients;
• the financing method and rate, or the expiry and rollover dates for dated contracts;
• the trading hours and any daily breaks;
• the dividend or other adjustment policy;
• any commission and how it is calculated.

There is no industry standard. One broker's "US 500" CFD might be worth 1 dollar per index point per contract; another's might be 10 dollars per point, or allow fractional sizes. A gold CFD might represent 1 troy ounce or 100 troy ounces. Two traders who both "buy 1 lot of gold" at different brokers can have exposures that differ by a factor of a hundred. Always check before you trade.

Share CFDs

Contract size and point value

Share CFDs are usually the simplest: one CFD normally represents one share. If you buy 50 CFDs on a company whose share price is 40 euros, your exposure is 2,000 euros, and a 1-euro move in the share changes your position's value by 50 euros. Some brokers allow fractional quantities.

Pricing and spread

The broker's price normally mirrors the underlying exchange's best bid and offer, sometimes with an added markup. Many brokers quote share CFDs at the exchange price and charge a separate commission instead. Spreads on large, liquid shares are typically narrow during exchange hours; on smaller companies they can be much wider, and the size you can trade may be limited by the depth of the underlying order book. Our guide to how stock markets work explains order books and liquidity.

Commission

Share CFDs commonly carry a commission calculated as a percentage of the trade value, often with a minimum charge per trade. A minimum charge matters for small trades: a fixed minimum on a 500-euro position can be a far larger percentage than the headline rate suggests.

Leverage

Under ESMA's product intervention measures, retail clients can use at most 5:1 leverage on individual shares, which means a margin of at least 20% of the position's value. Brokers may require more for volatile, small or illiquid shares, and may raise margins ahead of earnings or corporate events.

Dividends and corporate actions

If you hold a long share CFD when the underlying share goes ex-dividend, the share price usually drops by roughly the dividend amount. To compensate, the broker credits long positions with a dividend adjustment and debits short positions. The long credit is sometimes reduced to reflect withholding tax, while the short debit is often the full gross amount; the exact policy varies. Splits, rights issues, mergers and delistings are handled by adjusting the position or closing it. Our guide to dividends and corporate actions covers these in detail.

Hours

A share CFD can normally be traded only while its exchange is open, sometimes excluding the opening and closing auctions. Overnight news, such as an earnings release after the US close, cannot be traded until the next session, and the share can open far from the previous close. A stop-loss does not protect against that gap. See gap risk and weekend risk.

Index CFDs

Contract size and point value

Index CFDs are quoted in index points, and the specification sets a value per point per contract, such as 1 euro per point on a German index CFD or 1 dollar per point on a US one. Many brokers offer several sizes of the same index, often labelled "mini" or "micro". Exposure is simply index level times point value times number of contracts.

Cash versus futures-based index CFDs

Brokers generally offer two kinds:

• Cash (undated or rolling) index CFDs track a price derived from the underlying index or its nearest future, adjusted to approximate the current "cash" level. They have no expiry, and you pay or receive overnight financing for each night you hold.
• Futures-based (dated or forward) index CFDs track a specific futures contract and expire on a set date, usually quarterly. There is no separate daily financing charge, because the cost of carry is built into the futures price, but the spread is often wider. At expiry the position is closed or, at some brokers, rolled into the next contract.

As a rough rule, cash CFDs tend to suit shorter holding periods and futures-based CFDs can work out cheaper for longer holds, but the only way to know is to compare the specific costs. Our guide to trading index CFDs goes deeper.

Leverage

ESMA distinguishes major and non-major indices. Major indices, which include benchmarks such as the S&P 500, Dow Jones Industrial Average, Nasdaq 100, DAX, FTSE 100, CAC 40, EURO STOXX 50 and Nikkei 225, are capped at 20:1 for retail clients (5% margin). Other indices are capped at 10:1 (10% margin).

Dividend adjustments

When shares in a price-return index go ex-dividend, the index level drops slightly. On cash index CFDs, brokers usually credit long positions and debit short positions with an adjustment proportional to the index points lost. The DAX is different: it is a performance (total return) index in which dividends are treated as reinvested, so many brokers make no dividend adjustment on DAX CFDs. Check your broker's policy for each index.

Hours

Index CFDs often follow the hours of the underlying futures rather than the stock exchange. US index futures trade almost around the clock from Sunday evening to Friday evening (New York time) with a short daily break, so US index CFDs are frequently quoted outside regular stock-market hours. European and Asian index CFDs may have their own extended sessions. Prices outside the main session are typically less liquid and spreads are often wider. Our market hours tool shows exchange hours in your time zone.

Commodity CFDs

Contract size and point value

Commodity CFDs are priced in the units of the underlying market: US dollars per troy ounce for gold and silver, dollars per barrel for crude oil, and so on. The contract size varies widely: a gold CFD might be 1 ounce or 100 ounces, an oil CFD might be 1 barrel, 10 barrels or 100 barrels. Because nearly all commodities are priced in dollars, a euro or sterling account adds currency exposure and conversion costs.

Pricing: spot, cash and futures

There is no single global "spot price" for most commodities in the way there is for a share; prices are set mainly in futures markets. Brokers therefore build commodity CFDs in different ways:

• Spot gold and silver have an active over-the-counter spot market, and spot metals CFDs are often treated much like currency pairs, with daily financing.
• Energy and agricultural CFDs are usually based on futures. A dated CFD tracks a particular contract month and expires. A cash or rolling CFD is derived from the nearest futures contracts and adjusted, with the broker managing the roll and passing the price difference through as an adjustment or financing charge.

When the underlying rolls from one futures month to the next, the price can shift because the two months trade at different levels. Brokers handle this differently: some make a cash adjustment so the roll has no net effect on your equity, others close and reopen the position and charge a spread. Our guides to how commodity futures work and oil trading explained cover contango, backwardation and rollovers.

Leverage

Gold is treated like a major index: retail leverage is capped at 20:1. Every other commodity, including silver, oil, natural gas and agricultural products, is capped at 10:1. See our guide to gold and silver explained for why the two metals behave differently.

Hours

Most commodity CFDs follow the hours of their futures markets, which run for most of the day on weekdays with short breaks. Liquidity varies a lot between sessions, and scheduled data, such as weekly US oil inventory reports, can produce sharp moves and wider spreads.

Overnight financing: the cost that grows with time

Cash CFDs on shares, indices and spot metals charge financing for each night a position is held past the broker's daily cut-off. The usual structure is:

• Long positions pay a benchmark overnight rate for the currency of the instrument, such as €STR for euros, SONIA for sterling or SOFR for US dollars, plus the broker's markup.
• Short positions receive the benchmark rate minus the markup, which means they often pay a charge when benchmark rates are low and may receive a small credit when rates are high.
• The charge is calculated on the full position value, not the margin, usually divided by 365 (or 360 for some currencies) per night.
• Weekend financing is often charged on one weekday night, commonly Friday or Wednesday depending on the instrument and settlement conventions.

Futures-based CFDs do not have this daily charge, but the price already reflects the cost of carry, and the spread on dated contracts is usually wider. Our guide to swap and overnight financing explains the principles, which apply across asset classes.

Worked example: three trades, three sets of terms

These are illustrative numbers only. Real contract sizes, prices and rates vary by broker and over time.

A share CFD

• Buy 200 CFDs on a share at 25 euros: exposure 5,000 euros.
• Retail margin at 5:1 (20%): 1,000 euros.
• Commission at an illustrative 0.1% each way: about 5 euros to open and 5 euros to close.
• Financing at an illustrative 7% a year: 5,000 times 7% divided by 365 is about 0.96 euros a night, or around 29 euros over 30 nights.
• A 1-euro fall in the share costs 200 euros: 4% of the exposure, but 20% of the margin.

An index CFD

• Buy 2 contracts of a cash index CFD at 20,000 points with a point value of 1 euro: exposure 40,000 euros.
• Retail margin at 20:1 (5%): 2,000 euros.
• Financing at an illustrative 6% a year: about 6.58 euros a night.
• A 100-point move (half of one per cent) changes the position's value by 200 euros, which is 10% of the margin.

A gold CFD

• Buy 10 ounces of a spot gold CFD at an illustrative price of 2,500 dollars an ounce: exposure 25,000 dollars.
• Retail margin at 20:1 (5%): 1,250 dollars.
• A 20-dollar move in gold changes the position by 200 dollars, or 16% of the margin.
• If the account is in euros, the gain or loss, the margin and the financing are all converted, and the exchange rate itself can add to or subtract from the result.

The point of comparing them side by side is that leverage, financing and point value interact differently in each case. A position that looks small in "lots" or "contracts" can carry a large exposure. Our position size calculator and margin calculator help translate a stop distance and account size into a contract count.

The ESMA leverage caps in one place

For retail clients in the EU, and with equivalent rules in the UK, maximum leverage on CFDs is:

• 30:1 on major currency pairs.
• 20:1 on non-major currency pairs, gold and major stock indices.
• 10:1 on commodities other than gold and on non-major stock indices.
• 5:1 on individual shares and other underlyings not listed elsewhere.
• 2:1 on crypto-assets.

These sit alongside the 50% margin close-out rule, negative balance protection and the standardised risk warning disclosing the share of retail accounts that lose money. Clients who qualify as professional can get higher leverage but give up these protections. Full details are in our guide to ESMA leverage limits and negative balance protection, and margin call and stop-out explains how close-out works in practice.

Trading hours and gaps across asset classes

Hours matter because a position cannot be adjusted while its market is closed, and prices can reopen at a very different level.

• Share CFDs generally trade only during the exchange's regular session, so overnight and weekend news is reflected at the next open.
• Index CFDs often trade for most of the day on weekdays, so many news events can be traded as they happen, but they close for the weekend.
• Commodity CFDs follow futures hours with daily breaks, and close at weekends.
• Holidays differ by country. A US holiday can mean thin or no trading in US index and share CFDs, while European markets are open.

A stop-loss is triggered at the first available price after the market reopens, which may be well beyond the stop level. A guaranteed stop, where offered, removes that risk for a premium. Our guide to slippage explained covers execution in fast markets.

Common mistakes

• Assuming one lot means the same thing everywhere. Contract sizes and point values differ by broker and by instrument; read the specification first.
• Ignoring currency. Trading a dollar-priced index or commodity from a euro account adds exchange-rate risk and conversion charges, covered in our guide to hidden broker fees.
• Holding cash CFDs for months without adding up financing. Daily charges look trivial and add up to a material percentage of the position over a year.
• Forgetting dividend debits on shorts. A short share or index CFD over an ex-dividend date is charged the dividend adjustment.
• Being surprised by expiry. Dated CFDs close on expiry unless rolled, sometimes at a moment that is not convenient.
• Trading share CFDs around earnings without planning for gaps. Results released outside market hours often produce opening gaps that skip past stops.
• Treating the leverage cap as normal sizing. Size from the risk to your account if the stop is hit, not from the margin available; see position sizing.

Frequently asked questions

Why is leverage lower on share CFDs than on index CFDs?

A single company's share price can move far more than a broad index, especially around results or company news. ESMA's caps reflect that: major indices are limited to 20:1 for retail clients, while individual shares are limited to 5:1.

Do index CFDs pay dividends?

You do not receive dividends as such. On most price-return indices, brokers credit long positions and debit short positions with a dividend adjustment when constituent shares go ex-dividend. On a total-return index such as the DAX, many brokers make no adjustment because dividends are already reflected in the index.

What is the difference between a cash and a futures-based CFD?

A cash CFD has no expiry and charges or pays daily financing. A futures-based CFD tracks a specific futures contract, has no separate daily financing because the cost is built into the price, usually has a wider spread and expires on a set date.

Why is gold capped at 20:1 when other commodities are 10:1?

ESMA set its caps by asset class, broadly reflecting how volatile each class has been, and placed gold in the same 20:1 band as major indices and non-major currency pairs. Silver, oil and all other commodities fall under the 10:1 cap for retail clients, so a silver position needs twice the margin of a gold position of the same value.

Can I trade share CFDs outside exchange hours?

Usually not. Most brokers quote share CFDs only during the underlying exchange's regular session. Some offer limited extended-hours trading on certain US shares, typically with wider spreads and lower liquidity.

Are commodity CFDs based on the spot price?

It depends. Spot gold and silver CFDs follow the over-the-counter spot market. Most energy and agricultural CFDs are derived from futures, either tracking a specific contract month or rolling between months with an adjustment. The specification sheet tells you which.