CFDs vs futures: what are the differences?
Financial jargon got you down? Here are the differences between CFDs and futures, and how to take a position with us.
What's the difference between CFDs and futures?
CFDs and futures are both ways to trade a wide range of financial markets, including forex, indices, commodities, bonds and more. CFDs are often regarded as more ‘flexible’ than trading futures directly.
With us, you can trade listed futures with a US options and futures account, and you can use CFDs to trade on spot prices and future prices.
If you’re trading listed futures, you’ll take positions via outright futures contracts that track an underlying’s spot price. Trading CFD futures acts in the same way, except you’ll be able to trade on prices rising or falling without accepting any of the obligations that futures contracts entail.
To explain the differences between CFDs and futures, let’s break down each of them on their own.
What are CFDs?
CFDs are a leveraged financial derivative that let you speculate on prices rising or falling in an underlying market, without having to take direct ownership. You’d ‘buy’ the underlying market if you think the price will rise, and you’d ‘sell’ the underlying market if you think the price will fall.
Your profit or loss when trading CFDs is calculated by using your total position size multiplied by the difference between the open and close prices of your position.
What are futures?
Futures are financial contracts in which a buyer and seller agree to exchange an underlying market for a predetermined price at a future date. When two parties enter into a futures contract, the buyer is accepting the obligation to buy the underlying market, and the seller is accepting the obligation to sell it, at or before the contract’s expiry for the predetermined price.
Futures are often used to hedge against expected price rises in an underlying market. For example, airlines might buy oil futures to hedge against the possibility of rising fuel prices. That’s because buying oil futures means that airlines can lock in a price, and the price for the futures contract will stay the same – even if the price of oil rises in the underlying market.
CFDs vs futures: how to trade
With us, you can trade US-listed futures as well as CFDs on futures or spot prices.
Our dedicated US options and futures platform enables you to retain financially settled futures until they expire. However, to prevent physical delivery, futures contracts with a deliverable commodity must be closed before their expiration date when using our platform.
Discover US options and futures
Trading CFDs on futures gives you exposure to the futures market, but without requiring you to take on any obligations or worry about any of the other nuances that are associated with futures trading.
Learn more about CFD trading
With both listed futures and CFDs, you’ll be able to speculate on bullish or bearish conditions in the underlying market. That’s because you can ‘buy’ to go long when you think futures prices will rise, as well as ‘sell’ to go short when you think they’ll fall.
Our US options and futures account enables you to engage in listed futures trading directly. This provides access to micro, mini and standard futures contracts across a diverse range of markets in their pure form.
Listed futures |
|
Shares |
No |
ETFs |
No |
Equity indices |
Yes |
Forex |
Yes |
Commodities |
Yes |
Bonds and rates |
Yes |
CFDs are one of the derivatives we offer; we also offer spread bets. Both of these products let you trade a range of financial markets including shares, forex, commodities, indices and more. With us, you can trade on either spot prices or futures prices with CFDs or spread bets
Spot prices let you trade on the current market price of an underlying asset like shares, ETFs, indices and forex. Spot prices have tighter spreads, but you will pay overnight funding charges – making them better-suited to intraday positions
Futures prices let you trade CFDs or spread bets on the futures price in an underlying market like indices and commodities. Futures prices have wider spreads, but you won’t pay overnight funding charges – making them better for positions that’re held for more than one day
| CFD market | Spot | Futures |
| Shares | Yes | No |
| ETFs | Yes | No |
| Indices | Yes | Yes |
| Forex | Yes | No |
| Commodities | Yes | Yes |
| Bonds and rates | No | Yes |
While some of the markets in the table above aren’t available for CFD futures, they might be available for spread betting futures or forwards within our platform. Here’s how our spread betting offering matches up. For ease of understanding, within our platform our futures and forwards offerings are technically the same.
| Spread bet market | Spot | Futures/forwards |
| Shares | Yes | Yes |
| ETFs | Yes | Yes |
| Indices | Yes | Yes |
| Forex | Yes | Yes |
| Commodities | Yes | Yes |
| Bonds and rates | No | Yes |
Benefits and risks of listed futures trading
Trade forex, equity indices, commodities, and bonds and rates
Commission from as little as $0.85
Pay no stamp duty on your profits
Go long or short
Open a position with leverage – increasing your potential profit or loss
Benefits and risks of CFD trading
Trade shares, ETFs, forex, indices and commodities
Enjoy tighter spreads by trading at spot prices
Go long or short
Pay no stamp duty on your profits
When trading with leverage, your profits and losses are magnified and there’s a high risk of losing money rapidly
Benefits and risks of CFD futures trading
Trade forex, indices, commodities and bonds
Enjoy no overnight funding charges with futures prices
Go long or short
Pay no stamp duty on your profits
When trading with leverage, your profits and losses are magnified and there’s a high risk of losing money rapidly
Leverage lets you get full market exposure for an initial deposit, known as margin. This can help to bring down your initial outlay, but leverage will act to increase both your profits or your losses, so it’s important to take steps to manage your risk before opening a leveraged position.
Learn more about the impact of leverage on your trading
If you’re not ready to trade listed futures or CFDs yet, we’ve also got educational resources like IG Academy with free courses on how to trade. Plus, we offer a demo account for CFD trading – giving you £10,000 in virtual funds to build your confidence in a risk-free environment.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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