So we know that CFDs are derivatives, just like futures but there are many differences between a futures contract and a CFD. We are going to sum up below the main difference: CFD’s vs Futures

So then, futures & options contracts are traded on a Futures Exchange; these futures contracts are standardised and specify the price agreed and expiry date – when buying or selling a Futures contract you can actually be buying or selling from absolutely anyone around the world. You actually do not know who you are buying from or selling to, and equally the person or organisation that is at the other end of your trade will not know who they are selling to or buying from. This means it is a totally blind contract in terms of the buyer and seller.

This is where Contracts For Difference are different – a CFD is traded with a CFD broker or supplier who supply both bid prices and offer prices, which means that they will both buy and sell from and to you. When buying or selling a CFD you are only able to trade with the broker or supplier – the supplier knows exactly who you are, and on the other hand you know exactly who the supplier is. This means that CFDs in this sense are a customised derivative that does not have a standardised form.

So in short Futures trading involves buying or selling contracts traded on an exchange at a price agreed today, but to be delivered on a certain future date. A Contract for Difference – or CFD – is an alternative way to speculate on shares within global markets. When a CFD is arranged, both parties agree to exchange the difference between the opening price and the closing price of the underlying shares at the termination of the contract.
We advise you to be very careful about assessing your trading costs before embarking on CFD trading or futures trading. You have to be prepared to make substantial losses as well as potentially making substantial profits. There’s plenty of help out there, tips and advice – even courses. Just believe me when I say that day trading is a tough game so an absolute essential is to minimise all costs where possible and look, research every investment vehicle before you choose to take that path.

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MF Global Markets are a global company who specialise in investing – they offer trading platforms for both Futures & Options and CFD trading, plus many other markets. There are many benefits to be had, including free help guides and insider knowledge plus there are 100’s of different markets available to trade on. It’s worth visiting them here to see for yourself!

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