Nature of Product
A CFD is a contract under which the parties agree to exchange the difference, in cash, between the opening value and the closing value of the contract.
CFDs are leveraged financial products, meaning that you only have to outlay a small percentage of the notional value of a transaction.
We offer a two-way price on a number of Commodity CFDs. For instance, we may quote the Spot Gold at 1,265.0-1,265.4.
If you expected Gold to rise you would buy at 1,265.4, if you expected it to fall you would sell at 1,265.0.
You nominate the number of contracts you wish to trade, with the value of each contract determined by the tradeable unit of the contract.
For instance, in this case one contract would represent USD $1 for each 0.01 movement in price.
Let's say you chose to buy 10 contracts at 1265.4. This would equate to a notional value of £1,265,400 (126,540 multiplied by 10 contracts).
In order to place the trade we would require margin on your account of 1% of the notional value of the trade, which equates to £12654.00 in this case.
In the above example, the value of your open position would increase by £10 for every 0.01 point increase in the price of Gold and decrease by £10 for every 0.01 point fall in the price of Gold.
You can close your position at any time during our trading hours. Positions can be automatically closed if the available funds on your account fall below 20% of the required margin to have positions open.
There are a number of different order types that you can place in connection to a trade to manage your risk such as stop loss, trailing stop loss and guaranteed stop loss orders.
Please make sure you fully understand the nature of CFD Trading and the below risks associated with trading such products before making a decision to trade as there is a chance you can lose significantly more than your initial deposit.
Risks of the Product
Although CFDs allow you to speculate on the rise and fall of global financial markets at a relatively low cost, without ever owning the underlying asset, they are considered to be risky products:
- CFDs are "over the counter" (OTC) products, which means that they are not traded on a licensed financial market, such as a Stock Exchange. They are a contract between you and us, which means you are exposed to the risk of us as the counterparty not fulfilling our obligations to you.
- The leverage nature of CFDs means that a relatively small move in the price can cause an immediate and substantial loss to you, including a loss far greater than the amount of your initial investment.
- Financial markets can be very volatile. Gapping refers to an occurrence whereby the quoted price moves sharply from one level to the next, through an order level meaning your order may be executed at a worse price than you had hoped for which may incur losses beyond expectation.
Foreign Exchange risk
- CFDs are denominated in the currency of the relevant underlying market. Whilst trading in foreign denominated CFDs you are exposed to the risk that the proceeds of the trade will not be worth as much as they would have been at the onset of trade due to an adverse movement in the exchange rate.
Costs of Product
The principle cost or commission of trading CFDs is incorporated in what is known as the Spread, which is the difference between the sell and buy price. The Spread is fixed and can be viewed, along with other specific product information, here in the Market Information Sheets
There are two types of Commodity CFDs, Cash based and Future based. For Cash based Commodity CFDs Bets there is a cost of holding a position open overnight, known as the Overnight Financing Charge. The effect of these adjustments is to mirror the effect of us financing the asset in the underlying market on your behalf.
When holding long positions your account will typically be debited with the charge and, when holding short positions, it may lead to you being credited with the charge but it will depend on the relative interest rates of the country of the underlying market.
How to Complain
If you have a complaint about this product, you should contact us immediately at email@example.com
We must give you a response within 8 weeks, but we will normally respond to complaints within 3 days or less.
Please see Customer Terms and Conditions
If you are not happy with our response, you may take the complaint to the Financial Ombudsman Service