CFD Markets Explained
CFD markets are the assets and benchmarks that contracts for difference track, including currencies, stock indices, commodities and individual shares. You trade changes in a reference price rather than buying the asset itself. As ASIC’s Moneysmart guidance explains, CFDs are complex, high risk products, and most people lose money trading them.
The practical question is not how many markets a platform offers. It is whether you understand the price drivers, contract terms and costs of the market you choose. This guide compares those differences; our broader CFD trading guide covers the product itself.
US availability: Retail CFDs are not available to residents of the United States under the regulatory framework applied by providers. OANDA’s US eligibility notice confirms this restriction. A CFD referencing a US stock or index does not mean US residents can trade it.
What a CFD Market Actually Represents
A retail CFD is generally an agreement with a provider, not an exchange order to purchase the underlying asset. The FCA’s review of CFD pricing describes providers as manufacturers of over the counter derivatives that sell directly to investors. Their pricing decisions affect the spread, commissions and financing charges you pay.
Read a market name as a starting point, not a complete description. Before comparing two apparently identical instruments, check their reference price, contract size, settlement currency and expiry arrangements. An index name alone does not tell you whether the contract follows a cash benchmark or a dated futures price.
The Four Main CFD Markets
Providers organize their products differently, but IG’s market directory illustrates the familiar divisions between forex, indices, commodities and shares.
| Market | Typical reference | What to check |
|---|---|---|
| Forex CFDs | Currency pairs such as EUR/USD | Pair direction, contract size and financing |
| Index CFDs | Benchmarks such as the S&P 500 or FTSE 100 | Benchmark, value per point and price basis |
| Commodity CFDs | Gold, crude oil and other commodities | Price units, reference contract and roll policy |
| Share CFDs | An individual listed company | Exchange, corporate actions and commissions |
Forex CFDs: A View on Two Currencies
Forex CFDs follow an exchange rate. Buying EUR/USD expresses a view that the euro will strengthen against the US dollar; selling it expresses the opposite view. Currency prices respond to interest rates, economic conditions and trade developments, as outlined in Moneysmart’s explanation of forex trading.
The comparison between two economies matters. A positive view of the euro is incomplete without considering the dollar. For a hypothetical long EUR/USD trade, a move from 1.0800 to 1.0900 is favorable before costs. A move to 1.0700 is unfavorable. The financial result depends on the amount of currency exposure represented by the contract.
Before choosing a pair, write down which side of the exchange rate your analysis concerns. Then check whether upcoming announcements from the other country could undermine that view. Do not select a pair simply because its name is familiar.
Index CFDs: Exposure to a Group of Companies
Index CFDs reference a stock market benchmark rather than one company. However, the companies within an index do not necessarily have equal influence. The S&P 500’s published methodology uses float adjusted market capitalization weighting, giving larger constituents greater influence on its movements.
This makes the benchmark’s composition worth checking. If your intended trade concerns a broad equity market, ask whether the chosen index represents that view or concentrates exposure in companies and sectors you did not intend to emphasize.
Economic announcements also belong on the watchlist. CME Group’s fundamental analysis guidance identifies employment reports among the inputs relevant to stock index markets. An index avoids relying on a single company’s outcome, but it does not remove exposure to economy-wide repricing.
Commodity CFDs: Different Markets Under One Heading
“Commodities” is a broad platform category, not one trading behavior. Energy, agricultural products and metals require different research. CME Group’s guide to commodity supply and demand explains how weather, inventories, harvest schedules and seasonal consumption can affect prices.
Gold needs a different emphasis from a crop or fuel market. CME’s gold market overview highlights monetary policy, inflation data, the dollar and financial uncertainty among the factors traders monitor. Calling gold a defensive asset does not make a margined gold position a defensive trade.
Start with the exact commodity and reference contract. “Oil” is not a sufficiently precise trading plan. Identify the benchmark, pricing units and contract format before deciding whether the instrument matches your analysis. Check the event calendar too: the relevant inventory release for one product may tell you little about another.
Share CFDs: Company Exposure Without Share Ownership
Share CFDs concentrate the trade on an individual business. Research should therefore include its financial results, operating risks and forthcoming announcements. Investor.gov’s stock guidance explains that prices can respond both to events inside a company and to political or market developments outside its control.
For a hypothetical trade based on improving company results, distinguish your company view from your broader market view. Would you still want the position if the business performed well but its sector weakened? That question helps identify what you are actually trying to trade.
Corporate actions also affect the contract. Under IG’s dividend adjustment policy, qualifying long CFD positions receive credits and short positions receive debits around dividend events. These are contractual adjustments, not dividends received through share ownership. Check the provider’s treatment rather than assuming a dividend date creates free income.
Cash CFDs Versus Futures Based CFDs
The asset category is only half the description. You also need to know which version of that market the contract references.
A dated futures CFD follows an underlying futures price and has its own expiry arrangements. It remains a CFD with the provider, rather than an exchange traded futures position. IG’s futures CFD details also warn that the last dealing day for some commodity and bond CFDs can differ from the underlying exchange contract.
Cash or undated products use a different holding structure. Under IG’s published financing terms, cash CFDs held beyond the funding cutoff incur overnight adjustments, while its futures and forwards do not have a separate overnight funding charge but generally have wider spreads. Some undated commodity prices are constructed from futures contracts, with a corresponding adjustment as the reference changes.
The practical implication is that two charts labeled “crude oil” need not represent interchangeable trades. Compare the reference price and adjustment policy, not just the direction of the chart. Ask what happens at expiry, whether a position rolls automatically, and what charges that process creates.
Evaluate costs over your intended holding period. A spread comparison alone will not settle the choice. Our guide to CFD overnight financing covers the holding-cost calculation in more detail.
Other CFD Markets and Access Restrictions
Some providers offer products beyond the four main categories. These can include ETFs, government bonds, interest rates, volatility and cryptocurrencies. IG publishes both ETF CFD product details and a directory of additional CFD markets. Availability should be checked against the legal entity serving your account, not another regional version of its website.
Crypto illustrates why product distinctions matter. The UK prohibition on retail cryptoasset derivatives remains in place. The FCA’s decision to permit retail access to certain crypto exchange traded notes from October 8, 2025, did not lift the crypto derivatives ban.
Do not treat an ETF, an ETN, a CFD and direct ownership of an asset as different names for the same position.
How to Compare CFD Markets in Practice
Trading Hours and Execution
Check the dealing schedule for the exact contract, including daily breaks, holidays and any extended session. Do not assume a platform’s opening hours match the underlying exchange’s regular session. Providers can offer additional trading windows, as shown in IG’s extended and weekend market arrangements.
Availability is not the same as dependable execution. ASIC warns about CFD pricing and execution risk: a quoted price may differ from the price received when markets move quickly or trading activity is insufficient. Build that possibility into the trade plan rather than treating the displayed quote as a promise.
Contract Size and Margin
Compare financial exposure, not the number entered in an order ticket. For a hypothetical index CFD worth $2 per point, a 40-point adverse move produces an $80 loss before costs. At $10 per point, the same move produces a $400 loss. The chart has not changed; the position has.
Margin requirements also differ by market. Under the FCA’s UK retail CFD rules, minimum opening margin is 3.33% for major currency pairs, 5% for major stock indices and gold, 10% for commodities other than gold, and 20% for individual shares. These are UK regulatory minimums, not universal broker terms.
Use the CFD position sizing process to work backward from an acceptable planned loss. Then check the margin requirements. Reversing that order encourages choosing a position because the deposit looks affordable.
Total Cost Over the Intended Trade
Price the complete trade: entry, exit and the expected holding period. Ask about spreads, commissions, financing, currency conversion and any borrowing charge applicable to the position. Request an example using your proposed trade size rather than relying on a headline minimum.
This is not administrative housekeeping. The FCA’s CFD price and value review found wide differences in effective overnight funding rates and weaknesses in firms’ assessment of costs beyond spreads. The separate CFD trading costs guide explains how to assemble that comparison.
Choosing a Market Without Adding Unwanted Risk
Different instruments can still create overlapping exposure. FINRA’s concentration risk guidance explains how holdings in related industries or overlapping funds can amplify losses. Applied to CFDs, the same principle suggests checking whether an index position and several share positions repeat the same underlying risk.
Before adding a market to your watchlist, answer four questions:
- Can you explain what price the contract references?
- Do you know which scheduled events could challenge the trade?
- Can the minimum position fit your planned loss budget?
- Have you calculated costs and checked expiry or adjustment rules?
Start with a manageable research list rather than every symbol available. Record the answers in a contract sheet and revisit them when the provider changes its terms. Market familiarity should mean knowing the instrument’s mechanics and risks, not simply recognizing its ticker. Pair that research with a documented CFD risk management plan before considering a live position.