CFDs give you the perfect opportunity to trade all underlying assets, such as shares, indices, commodities, currencies (forex) and interest rate products with a low capital outlay. This is because you do not purchase the underlying asset directly, but still participate almost fully in its development.
CFDs therefore provide the simplest option for trading securities with leverage.
Our CFD webinars provide all the necessary information and useful tips for anyone wanting to find out more about CFDs or if you simply need more information. The benefit of a webinar is that you can conveniently peruse the content from your computer at home.
The custodian and account-holding bank for flatex clients is flatex Bank AG. The cash and securities account is generally managed free of charge. The market maker for CFD trading is the German securities trading bank Commerzbank AG, headquartered in Frankfurt.
Your gateway to the entire world of trading via ONE broker: Shares, warrants, certificates, funds, ETFs, bonds and CFDs. You choose whether you want to trade in the spot market or futures market and which securities or CFDs you want to trade at the time you make your investment decision.
Start your free trial now. Learn about the world of CFDs without any risk using our CFD demo account. Register and try out CFD trading free of charge, absolutely obligation- and risk-free, but under real conditions with 50,000 euros of play money.
Our platform offers complex and helpful tools to manage your CFDs.
A comprehensive explanation of the possibilities, modules and functions
provided by the CFD trading platform can also be found in our user manual.
A CFD is a contract for difference with an unlimited term, which lets you speculate on the price changes of shares, commodities, indices, interest rate products or currencies without actually owning these yourself.
The difference between the CFD’s buying and selling price results in the profit or loss. Contracts for difference therefore belong to the group of derivative financial instruments.
CFDs are comparable with other conventional derivatives, such as warrants and leverage certificates. However, CFDs have a much more transparent and simple appearance compared to these derivatives. The benefit of CFDs compared to other derivatives is that they do not just relate to the price of the underlying asset, but reflect this almost 1:1. Whether a share, index, commodity or bond, the associated CFD is always quoted at virtually the same price as its underlying asset and mirrors its price changes. If the underlying to which the CFD relates is a less liquid security, or liquidity is not available on the underlying market at certain times, in the event of a market or stop market order, the order may be transacted at a different price to that displayed in level 1. CFDs do not have any swap premiums, time value loss and time limit and therefore provide optimum price transparency.
Buying a share CFD (= long) replaces the physically underlying share with regard to profitability and offers the holder all the benefits associated with an increase in value of the share. However, it does not give the buyer the right to purchase the underlying shares. This means that a holder of share CFDs does not have any shareholder rights.
The sale of a share CFD (= short) gives the holder all the benefits associated with a loss in value of the shares, but does not involve the transfer of the underlying shares.
You can find a comprehensive training video on the CFD trading platform on our YouTube channel.
|Cash and securities account management |
flatex Bank AG
Index, commodity, currency
and interest rate CFDs
You can find details about calculating the financing costs in CFD trading from the current list of prices and services.
Trading with CFDs has numerous advantages, especially compared to trading with subscription warrants and leverage certificates. However, as CFDs are derivative products, they also involve risks.
CFDs give you the opportunity to take long as well as short positions. This feature is also the most important benefit, as it allows you to profit from rising as well as falling prices. In other words, you can buy CFDs in expectation of rising prices and subsequently sell them at a higher price. You can also sell CFDs in expectation of falling prices, i.e. take a short position, in order to subsequently buy them back at a lower price.
CFDs are transparent derivatives whose prices effectively reflect the prices of the underlyings 1:1. As a CFD trader, this means that you fully participate in any price changes to the underlying. By contrast, the prices of other derivatives, such as warrants and leverage certificates, are issued by the issuing finance companies in consideration of the term and volatility.
In contrast to most other derivatives, CFDs can be held over several weeks, months or even years with appropriate money and risk management.
To find the right subscription warrant or leverage certificate for you, you have to search through thousands of products, taking account of the maturity, omega, volatility, issuer, delta, etc. With CFDs, you are simply trading on the underlying.
CFDs trade directly on the price of the underlying.
No order fees are charged when trading on “index” CFDs, currencies, commodities and bond futures.
When trading CFDs, you do not buy the underlying. Instead, you deposit a security (= margin). This means that a small amount of your cash balance is blocked. For index CFDs, the required margin generally amounts to 1% - 2%, and 5% for share CFDs. This means that your capital can be leveraged by a factor of up to 100 depending on the CFD.
Warrants, certificates and CFDs are essentially in the same risk level, but CFDs provide much more transparency in pricing and scope in your positioning and trading strategy. There are no predetermined “packaged” contracts or certificates.
CFDs do not have an optional nature, such as subscription warrants. This means that you don’t need to worry about the right strike price or a possible loss of value over time. It behaves as if you had purchased the security on the stock market, but with a fixed leverage effect.
A specific feature of CFDs is their very high leverage effect in some circumstances. For a capital outlay of EUR 1,000 and a, for example, 10 percent margin requirement, you can open a position with a trading volume of EUR 10,000. If the price rises by 5 percent, the total value of your position increases to EUR 10,500. This means that you would have achieved a profit of EUR 500 with a capital outlay of EUR 1,000. However, the market can also move against you and lead to a loss of the same amount. Depending on the market development, the leverage effect can lead to a total loss of your entire capital. This risk particularly exists for positions that are held overnight, as the price of the underlying, which you are trading, can differ significantly from the previous day’s closing price at the start of trading on the following day, meaning that the position can no longer be promptly closed out.
Financing costs of 2.25% are charged on the leveraged capital when holding a position in CFDs overnight, as the CFD broker finances this for you.
You can find details on calculating the financing costs in the current list of prices and services.
Given that the price of the CFD develops in precisely the same manner as the price of the underlying, the fundamentals and chart influences effect the underlying as well as the CFD.
The price movement of a CFD is identical to the price movement of the underlying. However, the effect on your capital is many times higher due to the leverage effect.
In every case, the “execution price” is the volume-weighted average price (VWAP). This firstly takes account of the quoted quantity in first price level of the market depth. If the quoted quantity in the first price level is not sufficient to execute the order, the next price levels of the market depth are successively included to determine the execution price.
The market depth is therefore displayed as part of the order book. It provides information on the best money/offer quotes as well as the cumulative contract numbers per quote up to a predefined number (level) of quotes per instrument (e.g. 10 levels)
The prices established by the market maker take account of this market depth. The prices also depend on the available volume of the reference market at the relevant prices. The market maker therefore also maps the prices and volume of the reference market in this respect. As a result, the market maker prices can differ slightly from the other prices (without market depths) indicated on the market.
If the underlying to which the CFD relates is a less liquid security or liquidity is not available on the underlying market at certain times, the order may be transacted at a different price than that displayed in level 1 in the event of a market or stop market order.
For you, this can mean that an execution in the market depth leads to a less profitable volume-weighted average price (VWAP).
CFDs whose underlyings are traded in a non-euro currency are also subject to the relevant currency risks.
Due to the ESMA Notice dated 31/05/2018 all European CFD providers are obliged to provide its retail clients and any prospective clients with the following risk warning:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
79,51 % of retail investor accounts lose money when trading CFDs with this provider.*
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
*as per 10/2018. According to the ESMA risk warning conditions we will update this calculation every three months.
Whether on a stationary home PC, laptop or mobile app, there are multiple paths to CFD trading with all its facets.
flatex provides a range of services in the CFD trading offer. Our partner, a German CFD market maker, lets you trade CFDs on shares, indices, commodities, currencies and interest rate products using a professional CFD trading platform. If you are on the road, you can also trade your CFDs via an app for iPhone and Android.
Easily, quickly and effectively trade CFDs with our free CFD trading platform. You automatically receive access with your activation for CFD trading via the customer login.