CFD broker

CFD trading cost: How to calculate it in simple steps

Hi all,

In this third part of the online CFD course we are going to explain what the CFD trading cost are. The first part was all about what a CFD is and what the advantages were from using CFD. The second part of the online CFD course was about how you could make money with CFD trading. If you want to read part one and part two then click on the two links below.

Part 1 of the online CFD course: CFD is one of the greatest investment instrument for trading

Part 2 of the online CFD course: How to make money on CFD trading in a simple way

CFD Trading Cost: Kinds of cost

Before you are placing a CFD there some CFD trading cost that you should consider. At most CFD Brokers you will have to pay a commission fee, spread cost and a holding cost (if you are holding a CFD position longer then one day). However at Plus500, they only charge you the spread cost and a holding cost ( if you are the CFD buyer and if you are the CFD Seller you would receive a interest).

CFD trading cost of commission

When a CFD broker charge you a commission for each trade it will always consist out of the part. The first part of the commission is the minimum fixed commission price which is usually between 7 -9 pounds. And the second part of the commission consist a percentage of a trading value. So basically the higher the transaction trading value is the more commission you pay. Luckily there are some brokers  such as Plus500 and that doesn’t charge these kinds of commission. If you want to know more about these two brokers then you can check them at our brokers review.

Spread cost

When you are  buying  and selling CFDs immediately, the spread amounts to the difference between what you paid and what you receive. If you sell share-based CFDs, you will receive interest. So basically when you begin CFD trading you will notice that the transaction fees is always related to your trade. A part of the CFD trading cost is called a spread cost which is the difference between the bid/buy price and ask/selling price.


Let’s say you want to trade in forex and that the spread is 2 pip. So which this means is that you transaction fee is 0,0002 cent per traded unit. If you are trading GBP/EURO with 100 pounds and a leverage of 1:200, your transaction fee will be ( 100 x 200 x 0,0002)= just 4 pounds.

Overnight cost

Unlike trading options CFD’s doesn’t have a expiration date. You can hold most of your CFD’s position overnight, weeks or months. However when  you hold a position overnight you will be charged interest. This interest is really small but you get charged for it because when you hold a CFD position overnight it will be seen as an investment that has been made with borrowed money. So in this case your broker(lender) have to charge you a little interest.


Let’s say you want to buy Starbucks CFD shares at a price of 50 pound a share with a transaction value of 10.000 pounds and you have a leverage of 1:20. With this leverage of 1:20 you will have to use only 500 pounds of your money instead of 10.000 pounds instantly. And you will hold this position for 10 days and sell those at 60 pounds per share.

So what would be your profit after deducting the CFD trading cost?

Initial trading value was £10.000,- which equals 200 Starbucks CFD shares.

Final trading value (after you have sold your position) is (£60,-x 200 Starbucks CFD shares)= £12.000,-

CFD trading cost = spread opening + spread closing + overnight cost.

spread opening cost= £20,-

spread closing cost= £20,-

overnight cost= the interest rate at most brokers is usually the Libore interest + 2,5%. Let say that the libor in this case was 2,5%. So the total interest rate for a overnight position in total is 5%. The overnight cost will be £10.000 (transaction value) x 5% (interest per night)/365 days= £1,36

The total overnight cost for holding it for ten nights will be £1,36 x 10= £13,69

In this case your net profit will be £12.000 – £10.000 -£ 20 -£20 -£13,69 = £1.946,31

So your return on the investment on CFD trading with only £500 pounds is nearly 400%!

Now your CFD trading cost could be more if the broker also charged you a commission on each transaction that you have made. Fortunately there are a few brokers that don’t charge commissions. One of them is Plus500. If you have any questions regarding this topic, please post them in the comment section below and we will answer it as soon as possible.

Read more about CFD Trading: How to make money with CFD Trading

Make money on CFD trading in a simple way


cfd trading

In this CFD tutorial I am going to explain on how you can make money with CFD trading.Now if you don’t know what a cfd is then you should read this article: What are CFDs?

The possibility that cfd trading gives to a trader

One of the reason that I like CFD trading so much is that it gives you so much possibilities to trade. You can use cfd trading to make a trade in forex, shares/stocks all over the world, top Indices, commodities and all kinds of funds. For example if you don’t see any opportunities to make money in the FTSE then you can always look to the German market and see if Volkswagen share fits your requirement to make a decent profit. Or you can trade in gold by using cfd trading if you believe that gold market gives a  good opportunity to make a profit.

CFD Trading Step 1

The first thing you need in CFD trading is CFD broker. Its vital that you choose a good cfd broker. Because unfortunately there are still some brokers around that are scam. To avoid off getting a scam broker, you should take a broker that has licenses from Financial Authorities. In our brokers review you will find what our experiences are with different brokers. Our top picks at the moment are Plus500 and You can the reviews here: Plus500 Review & Review.

CFD Trading Step 2

After you have open a CFD trading account or if you already have one then it is time to make some profit. Here is the first thing that you should do. Create a trading plan. A trading plan is a simple plan where it states why you want invest or trade  in this object and at which price point you should get in or get out. One of the best way of determine a buying point is to use make use of the horizontal lines and trend lines. By using both U can pinpoint the price point where you should enter the market (buy the object) or leave the market (selling the object). If you want to know more about buying signales and selling signales then read this article: buying & selling signals.

Protect the down size risk

Have you ever heard of the first two rules of Warren Buffet in investing?

Rule nr.1: Never lose money

Rule nr.2: Never forget rule number One!

I love that rule. That’s why I always use a stop loss order to limit my potential loss.

cfd trading limit potential loss

cfd trading limit potential loss

By using a stop loss order, I am in control of my risk management. Meaning that I can control my potential losses and keep it small when the trading doesn’t work out well. And when it works out well I can make a huge profit while my loss is small.

A CFD trading making money extra tip: Use a stop loss order to protect your profit.

A stop loss order is used to keep you from losing money but it can also be used to secure your profit. Let’s you say your current trade is making a profit. Then all you need to do is to move up the stop loss order.


Let’s say the stock that you have bought at 20 pounds currently has a value of 35 pounds. The best thing to do now is to move the stop loss order to a price of 33 pounds. This way if the stock suddenly drops in price to 25 pounds, you will still have a profit of 13 pounds instead of 5 small pounds. If you have bought the stock with cfd then you profit will be a lot bigger then 13 pounds per share because of the leverage.



CFD broker

CFD one of the greatest investment instrument

Using CFD gives you a lot of advantages in trading.

In this post I will answer questions regarding cfd (contract for difference) are. And what the advantages are of using contract for difference in your portfolio.


What is a CFD?

CFD stands for contract for difference. In a CFD the contract stipulates two parties, which is typically described as “ Buyer” and “Seller”, which the seller will pay to the buyer the difference between the current value of an asset and its value at contract time. And if the difference is negative the buyer pays instead to the seller.

In effect CFDS are financial derivatives that allow traders to make a profit when the market prices are moving up or when the prices are moving down. If you want to know more about CFDS then read this article: CFDS for beginners

What are the advantages of using CFD?

When you start trading with CFDs you will encounter the term leverage. Leverages are one of the biggest advantages that a CFD has. What it does is that it gives you the ability to invest largely with a small amount of money. CFD gives you the ability to take advantage of small price movement. And many traders are using CFD for this purpose only.

However, investing through a large lever brings with it certain risks. This article is part of the short course of how to invest in CFDs. When you are investing in CFD you will always use leverage. A lever is always displayed as a ratio, eg 1:50. When the lever is 1:50, this means that with a balance of € 1,000 you can invest as much as € 50,000. With this CFD leverage you can add a greater amount of securities to your portfolio.

How does a CFD leverage works?

The leverage works in a similar ways as a mortgage. When you want to buy a house, you will need make a down payment and get a mortgage. In this case the mortgage gives you the ability to buy the house that you want. When you sold your house you pay off the mortgage. And what you have left is your profit.

The same way it works with CFD leverage. Let’s say you want to buy 100 Starbucks shares. With CFD Starbucks shares you only make a small down payment to acquire 100 Starbuck shares and the broker will finance the rest.

The broker is behind much of the position and the difference between the opening and closing price will eventually settle with your own balance. You are at no time the owner of the security; the broker will control both the buying and selling. When investing in CFDs, you have no further responsibility since you are not the owner of the physical effect.


Advantages of using high leverage

A major advantage of a high leverage is the fact that you can also achieve high gains with low power. If the share price rises eg with a euro and you use a leverage of 1:50 then you immediately earn € 50.00. However, when the price falls a euro, you will lose the same amount. The gain or loss on your position is usually settles with your balance. Be careful with leverage! You will not be the first to directly leverage from one hundred to open a position. With a higher leverage also come increased risks, since each euro to fall in price much higher loss entails. The leverage effect can work both ways and it is important to deal responsibly with this. Don’t use the full leverage in the early stage and go only use this useful tool once you know how you can make money investing. Once you figure out of how it works. Then using leverage will give you big profits!

Want to give CFD a try? Then click here: Try CFD for free and make use of unlimited demo account

Read more about CFD Trading: How to make money with CFD Trading

cfds dividends

CFDs Dividends – How does it work? Find it out here

Start trading now to receive a 20 pounds welcome bonus!

CFDs dividends. Did you know that you could get dividends that are paid on shares with CFDs? It is really simple. In this article you will get to know when to invest in cfd’s to get the dividends. And you will find out how the dividends dates will  influences your CFDs dividends position. If you don’t what CFDs are then please read this: CFDs.

CFDs dividends: How does it work?

Before we are going into CFDs dividends let’s check out how the dividends payments work on shares. When you own shares there are three important dates that you must know and remember for the dividend pay out. The first date is called ex-dividend date. If you bought shares before the ex-dividend date then you are entitled to get the dividend. However if you buy shares on the ex-dividend date or after then you are not entitled to receive the dividend.

The second date is called the record date. This date record last three days right after the ex-dividend date. In this period the investor must held their stock position in order to get the dividend. The reason for this is that it takes three days to settle the purchase of shares. The third date is the payment date. Its a fixed date where the company will pay the dividend to their shareholders. Usually this date takes after 2-3 weeks after the record date.

So how does the dividend payments works when you are having cfds dividends on these shares? Let’s say you are trading in these CFDs dividends of a certain share. Now you probably know that there are various charges and credits when you have open a cfd position. The dividend adjustments is one of these credits. Typically, the actual dividend payment made by a company is usually made a few weeks after the ex-dividend date. For instance, XYZ Company might go ex-dividend on the 3rd August but pays the dividend money on the 3th of September, however when owning a CFD dividends position for this period you’ll be credited the dividend on the following business day. Great isn’t? Well it is just one of the advantages of trading in CFDs dividends shares.

CFDs dividends: The influence on price changing

When you hold a long position in CFDs dividends shares, and held it the day before the ex dividend date, then you become entitled to receive a payment equivalent to the amount of the dividend. Remember that you must be in the position before the ex-dividend date to receive the dividend. For instance if the share you controlled through a CFD went ex-dividend on Wednesday, then you will need to have bought these CFDs dividends shares at least on Tuesday to earn the dividend credit.

If you are shorting the CFDs dividends shares then the  situation will be different as you now owe the equivalent of the dividend, and it will be debited to your account. Holding a short position is good in one way, because you get paid interest instead of paying interest on the margin as you do when you are long, but this is one place where you have an immediate apparent loss.Thus, if you are short selling a share or other securities (i.e. standing to gain from the position if the share price falls in value) and you are short prior to the ex-dividend date, then you will owe the dividend.

However the situation is not so clear in reality as it is described above. The reason for this is that  you must also consider is that the share price will change on the ex dividend date to reflect the amount of the dividend, more or less (although some traders make use of a dividend trading strategy to exploit market inefficiencies). On the ex dividend date you can expect the value of the shares to drop by nearly as much as the amount of the dividend, which maintains a level equity for the conventional shareholder.What this means in  is that your long CFDs dividends position might take a hit, even while you are receiving funds for the dividend amount. The short position will make a profit which offsets the dividend debit to your account.

Read more about CFD Trading: How to make money with CFD Trading