What is a CFD? Ownership, costs and risk
A contract for difference (CFD) gives exposure to a price change through an agreement with a provider. It does not give you ownership of the underlying share, commodity or other asset. Leveraged CFD trading can produce substantial losses. ASIC Moneysmart explains the risks of forex and CFDs.
How does a CFD gain or lose value?
A long position benefits from a higher closing price; a short position benefits from a lower closing price. The opposite movement produces a loss. Position size determines the monetary effect of that movement.
A simple price example
Suppose an illustrative contract represents one unit per point and a trader buys 20 contracts at 100, then closes at 103. The gross result is (103 − 100) × 20 = 60 currency units. A close at 97 produces a gross loss of 60. These assumed contract terms are for arithmetic only and are not an Antos Pinnacles product specification.
Which costs need to be included?
Subtract the applicable spread, commission, financing and other charges from the gross result. For example, if total applicable charges in the first illustration were 8 units, the net gain would be 52. Fees do not disappear when a trade loses money.
Does a small deposit mean a small position?
No. Margin is only the amount required to support a position. Check the full exposure and the loss from an adverse price move, rather than judging risk by the deposit alone.
Continue with leverage and margin, compare account conditions, and read the risk disclosure.
Educational information only. Examples exclude costs unless stated and do not describe a recommended trade or guaranteed outcome.