What do CFD’s Cost?

Similarly to shares, for buying and selling CFD’s there is a commission/brokerage fee which investors are required to pay for every transaction made. However, dependant on the particular CFD provider, these commission costs can be as low as $10.

In addition to these brokerage fees, depending on the position an investor takes out on a CFD, there are also other charges which may apply.

Interest Charges:

By taking out a “long” position, an investor is required to pay interest on the margin that has been taken out. This charge is usually calculated daily and will be dependant on the quantity of the stock in which the investor has chosen.

On the other hand, if an investor has taken a “short” position, then he will instead be paid interest.

Dividends:

As CFD’s are dependant on the price of the underlying stock, if dividends have been allocated then the relative CFD will also be paid the dividend. However there are a few differences in the way in which this payment of dividend occurs.

The first is that dividends for CFD’s will be paid to investors with “long” positions. However if the investor is “short”, then he/she will be required to pay the dividend amount.

The second difference is that in an ordinary share, dividends will normally take an amount of time after the ex-dividend date before the investor is able to actually physically obtain the dividend amount. However with CFD’s the dividend will be credited or debited (dependent on your long/short position) on the ex-dividend date.