What are the costs of trading CFDs?
CFDs are relatively cost effective to trade, particularly if you're trading intraday. Each CFD transaction is charged a rate of commission by the broker, applied as a percentage to the total trade value. Then, financing costs are applied to cover the cost of leverage on a daily basis, accruing overnight at LIBOR +/- X (where X equals the broker's own variable), divided by 365 to give a daily rate of interest. Of course, if your position loses, you also have to worry about the costs of repaying leverage, which can have the impact of making any losses feel all the more substantial.