Which contract is best for me?

Choosing your contract for a Germany 40 trade

Say you’re about to take a position on the Germany 40. You want to check which contract type will be most cost-effective for you. Here’s how:

1. Find your average hold time for trades

You’ve traded the index regularly in the past, so you start by checking your trade analytics in My IG – accessed from your dashboard.

Scroll through the data to find your average hold time:

Let’s assume you find it’s seven days.

2. Check the spreads for each contract

You can find all the information about our spreads for cash CFDs and futures in our product details for each asset class. The current spread also appears on the deal ticket:

In this example, you look up the details for CFDs on indices and learn that our typical spreads for the Germany 40 are:

• Cash CFD: 1.2 points
• Futures CFD: 6 points

3. Find the daily funding cost for a cash CFD

Our overnight funding page explains how to work this out.

In this case, suppose you calculate that the daily funding cost is 0.92 points.

4. Calculate the threshold point

Using the formula below, you can now work out the threshold timescale at which it becomes more cost-effective to trade a future CFD than a cash CFD:

(future CFD spread – cash CFD spread)/(daily funding points)

That gives us the following calculation:

(6 – 1.2)/0.92 = 5.22 days

So in this example, if your average hold time is six days or more, you’ll reduce unnecessary costs by trading a future CFD. Since you know that you normally hold positions for seven days, you conclude that a future CFD will suit you better than a cash CFD.

5. Take your position

Log in to our platform and navigate to the Germany 40.

The default contract type is a cash CFD. To change this, click on ‘futures’ at the top-left of the chart:

Click on the expiry date you want, then open and complete your deal ticket to place your trade in the usual way.