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Why trade CFDs?

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  • Can CFDs make a difference to the way you trade Equities

    It is an exciting time to be trading equities with markets in the US and Europe recording new highs. As part of your diversification strategy you may want to consider add contracts for difference (CFDs) to your portfolio. CFDs can be used to both speculate and hedge a range of assets whilst allowing you to diversify your current equity portfolio.

    To find out more about CFD's click here.

    Saxo Capital Markets is one of the few online brokers that allows you to trade both Equities and CFDs from one single account.

    Here are some of the main features of CFD trading with Saxo Capital Markets.

    • Build a multi-product portfolio in one trading account. Trade Shares, CFDs, FX, Futures and Bonds from the same account.
    • No stamp duty (please remember that tax rules are subject to change) 
    • The opportunity to short or long the markets, potentially profiting from both rising and falling prices
    • Trade UK and international shares from the same account
    • Count on outstanding platform reliability
    • Short-sell to protect your physical portfolio from adverse movements
    • Trade online through our multi-asset award-winning platform
    • Use up to 75%* of the value of your stock as collateral for trading in margined products such as FX and CFDs
    • CFDs are traded in the same notional amounts as the underlying market, so there's no need to learn a new trading language
    • You still get dividends from share CFD*
    • Take advantage of half margin requirements on all CFD's (up to EUR 50,000 - or equivalent - of collateral)

    * Subject to Saxo Capital Markets internal risk rating.​​​​
    * You will still set cash adjustment​​

  • Equities and CFDs have more in common than you might think

    Trading Equities and CFDs Equities are more similar than you think. You can apply your existing knowledge and trading strategy to CFD trading, diversifying your portfolio from Stocks to Stock indices, commodities, and ETFs to Forex - all with low margin requirements.

    When trading a CFD, this mirrors the same exchanges and prices as trading Equities. The order functionality is exactly the same and you will also have access to the same order types as you would when placing an Equity trade. 

     

    Saxo Capital Markets uses Smart Order Routing on both CFD and Equities trades so you can benefit from the fastest and efficient level of execution. You also have the option to open a Direct Market Access (DMA) account that will enable you to place orders directly around the live market data, so you can combine the benefits of trading exchange pricing with the leverage of margin-traded CFDs.

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  • Other Key features

    Live price data from all offered stock exchanges

    Saxo Capital Markets clients receive delayed pricing, which are subject to a subscription cost, where they can access free live price data on all stock exchanges. However, active clients placing four or more trades per month on the London Stock Exchange (either Stock trades or Single Stock CFD trades); will be entitled to a rebate. The rebate will only apply to Level 1 pricing and your subscription cost will be refunded directly to your account. For details on live price data and how to receive your discount, see Exchange agreements.

    Low access fee to Stock Screener & Equity Research

    Saxo Capital Markets offers full access to the advanced Stock Screener and Equity Research tool for a low monthly fee of EUR 1.99 per month (EUR 200 per month for Professionals) or equivalent. There are no activation costs and you can cancel your subscription at any time with no additional charge. For more information on trading conditions and commissions, and to learn more about using your Stock portfolio as collateral for margin trading, see Rates and Conditions.

     

    Other Key Factors to consider when trading Equities and CFDs with Saxo Capital Markets

    • Direct market access to 18,000+ Stocks on 30 stock exchanges
    • Free Online triple access (desktop, web and mobile) to a single multi-asset account
    • Free Smart Order Routing for best order execution
    • Free advanced Charting Package
    • Free placing/amending orders via the phone
    • Free dedicated Client Trading manager
    • Free Technical Analysis Tool
    • Free Stocks portfolio as collateral for margin trading
    • Free Economic CalendarFreeMarket News
    • Free Auto-generated monthly account reports
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  • When you expect the price of a stock to go up, you can choose to take a long position in a Single Stock CFD.

    In this example, you expect the XYZ Bank share price to RISE from its curren​t mid-price of £1.70. You have £10,000 to place on margin. With Saxo Capital Markets you have a 10:1 leverage on this instrument, meaning you only have to place 10% of the notional transaction value as margin.

    You decide to buy 50,000 CFDs at the offer price of £1.73, which gives you a position of (50,000*£1.71) £86,500 in notional value. You will be required to have £86,500 in your account to place the trade. 

    Each day you hold the long position open, you will be required to pay a financing cost on the notional opening value of the position.

    The interest rate used is LIBOR+3% (0.27144%+3% = 3.27144%). 10 days later, the XYZ Bank price has risen and you sell the 50,000 CFDs at £1.85.

    The trade details are:

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    Conversy if the market falls against you: 



  • When you expect the price of a Stock to fall, you can choose to take a short position in a Single Stock CFD.

    In this example, you expect the XYZ Bank share price to FALL from its current mid-price of £1.72. You have £10,000 to place on margin. Trading via a CFD offers a 10:1 leverage on this instrument, meaning you only have to place 10% of the notional transaction value as margin.

    You decide to sell 50,000 {10,000} CFDs at the BID price of £1.71 which gives you a position of (50,000*£1.71) £85,500 in notional value.

    The interest rate used is LIBID – 2.5% (0.26561%-2.5% = -2.23439%). Since the rate is negative you effectively have to pay 2.23439% overnight financing. 10 days later, the XYZ price has fallen and you buy back the 50,000 CFDs at £1.65.

    The trade details are:


    Conversely, if the market moves against you: 




  • We understand that trading with leverage can seem a daunting task. However you can take advantage of the features of CFD trading without having to leverage your account outside your deposit size.

    Please see an example below on how to use 1:1 leverage to replicate an equity share a trade using a CFD.

    In this example, you expect XYZ BANK share price to rise from its price of 250 pence. You have £10,000.00 on deposit in your account. With Saxo Capital Markets you can use 20:1 leverage* so in theory you can trade up to £200,000.00 however in this instance we are replicating a share trade using 1:1 leverage.

    You decide to buy £10,000.00 worth of XYZ BANK CFDs (approx. 4000 shares) at the ask price at 250 pence. Your margin requirement is £500.00 on this trade (5%). You could use up to £9,500.00 to trade other margined products however as we are replicating the equity trade keep the current level at 5%.

    In this scenario if you have no other positions and the price of the share falls to zero you will lose the total amount of the position – 4000 CFDs x 250 pence = £10,000.00.

    It is important you understand the risks and margin requirements.

    You buy 4000 XYZ BANK @ 250 pence.


    Example

    2 days later, XYZ BANKs price has risen 50 pence and you sell 4000 ​CFDs at 300 pence for a £2,000.00 profit

    CFD Costs

    • You will pay commission on the opening and closing trade.
    • Each day you hold the long position open, you pay a financing cost on the notional opening value of the position.
    • No stamp duty (Subject to change).
    Why would I use this strategy?
    • Avoid stamp duty – Save money
    • Cash adjustments for dividends
    • You will trade on the exchange at the live price. There is No spread added to the price.
     

    * Half margin available on FX (up to EUR 300,000 (or equivalent) of collateral). A range of single-stock CFDs and all Index-tracking CFDs (up to EUR 50,000 (or equivalent) of collateral).​​​​​​​

Trading CFDs with Saxo Capital Markets:

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  • Which exchanges can CFDs be traded on?

    Single Stock CFDs - Markets and Commissions

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  • Stop Loss Order

    Stop orders can be used to minimise trading losses, whilst not inhibiting your ability to make profits. Stop orders include trading stop loss orders and trailing stop orders. However, you should remember that it may not be always possible to close your position at your selected level, for example overnight or when the market gaps quickly (known as 'slippage'). ​

    Trailing Stop Order

    Enabling traders to control the level of risk which they are exposed to, the trading stop loss is a useful tool for any trading account. A trading stop loss can be placed alongside positions on a range of trading products including Forex, to CFDs and Equities. This allows for strategic trading by enabling traders to limit the risk of excessive losses. Allowing flexibility, a trading stop loss can be employed to ensure that traders don't need to keep an eye on the markets 24 hours a day.

    The trailing stop allows investors to set a pip distance between the current price, and the point at which they intend to exit the trade. If the current price should fall by that number of pips, the position will automatically be sold. If the current price rises, the percentage level will be recalculated from the new high. Using a trailing stop is an excellent method for minimising loss, whilst locking in profits in the event that the markets move against an investment position

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  • Rates & Spreads

    Click here to view our Single Stock CFD commissions.

    Click here for our Index CFD spreads.

    For full details on spreads and minimum trade sizes for Commodity and Forex CFDs, please click here.

  • CFD Workspace

    Trading the best opportunities requires skill, timing and great platform tools and each Saxo workspace is preconfigured by expert traders to get you up and running quickly.

    This template is designed for investors dealing predominantly with CFDs, the view is pre-populated with CFD Indices, UK & US large cap Stocks, FX and Commodity CFDs each in their own dedicated tabs demonstrating how products can be grouped for ease of trading.

    Take a look at the trading style below and download the workspace by clicking on the blue download button. Once you save this file, open it as a "Workspace" in the SaxoTrader platform. You can then customise it further.​

    download this template   ​​​

  • Questions about CFD trading

     

    What is a CFD?

    A CFD (Contract for Difference) is a derivative of a financial product and is used for trading. The CFD price behaves exactly like the underlying asset price.

    There is no actual ownership of the underlying asset of reference. A CFD is therefore a derivative product where Saxo Capital Markets is the counterparty to the trade. Since the product is not exchange traded, it is said to be traded over-the-counter (OTC).

    CFDs are traded on margin and can be sold short, making it possible to profit in falling markets or to hedge your Stock positions.

    What types of CFDs can I trade with Saxo Capital Markets?

    Saxo Capital Markets offers over 9,000  CFDs, including CFDs on Stocks from around the world, Forex CFDs, Stock Index CFDs, Commodity CFDs and CFDs on ETFs.

    All CFDs are available for trading through Saxo Capital Markets online trading platforms - read more.

    Which Stock indices can I trade as CFDs?

    With Saxo Capital Markets’s Index-tracking CFDs, you can trade over 20 major stock market indices such as the FTSE 100, S&P 500 and Japan’s Nikkei 225 with a single click and the flexibility to trade long or short.

    See all contract details of our Index CFDs.

    What commodities can I trade as CFDs?

    Commodity CFDs offer a simpler way to access the world’s commodities markets, and trade oil, gold, grains, energies and other major commodities on real-time prices.

    Click here to see all commodities available.

    What Stocks can I trade as CFDs?

    With Saxo Capital Markets, you will have access to online CFD trading in all major US, European and Asia/Pacific Stocks.

    See the full list of covered exchanges and the Single Stock CFD commissions here or click on the button below to view the full list of Single Stock CFDs offered by Saxo Capital Markets.

    View   individual Single Stock CFD margins

    What are the trading rates and spreads for CFDs?

    Click here to view our Single Stock CFD commissions.

    Click here for our Index CFD spreads.

    For full details on spreads and minimum trade sizes for Commodity and Forex CFDs, please click here.

    What are the margin requirements for trading CFDs?

    The margin requirement depends on the type of CFD and the individual contract.

    Margin requirements on CFDs are as low as 0.5% corresponding to a 200:1 leverage. Read more about CFD margin requirements.

    Note that with reduced CFD margin requirements, you have an increased exposure to risk.

    What are the risks?

    Whilst CFD and Equity trading can offer many benefits, it is important to note that trading derivative products carries a high level of risk to your capital and it is possible to incur losses that exceed your initial investment, so before deciding to trade you should ensure you understand the risks involved and seek independent advice, if necessary.

    Where can I learn more about trading CFDs?

    You can learn how to trade CFDs with TradeMentor, our free online trading education program. Available right in the trading platform, TradeMentor covers everything from CFD trading basics to technical analysis and advanced trading strategies.

    Click here to try TradeMentor now.

     
     
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Introduction video

Ways to place a CFD trade

An introduction to CFDs. Tom Hougaard explains how margin works and walks you through trading CFDs in both rising and falling markets.

 

watch video 
 

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Our product​s are traded on margin and it is possible to incur losses that exceed your initial deposit.

The TradingFloor.com website is the property of Saxo Bank A/S and any materials on this website are provided for information purposes only and do not take into consideration any individual's financial circumstances or investment objectives. Saxo Bank A/S is a licenced credit institution authorised by the Finanstilsynet and the protections afforded under the Financial Services Markets Act 2000 do not apply to the services provided by Saxo Bank A/S.

Saxo Capital Markets UK Limited is a company authorised and regulated by the Financial Conduct Authority, registration Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA.​​

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