We urge CFD traders contemplating long-term positions to remember to factor in the costs of financing significant leverage portions when calculating whether or not a trade viably profitable.

CFD positions, which are traded on margin and therefore composed of significant leverage portions, attract financing costs overnight, charged at a percentage of the total transaction size, which can often eat into the profitability of a transaction and traders must take care to factor these costs in to their investment decisions.

The costs of margin financing were not necessarily prohibitive, but nevertheless were significant enough to be a major concern for CFD traders.

CFD transactions can often run over a period of several weeks, and aren’t strictly a day-trading instrument. While short-term trading strategies are no doubt suited to CFDs as an instrument, overnight positions attract financing costs, applied as a percentage of the total transaction value as a further cost against trading profits. For traders looking at holding a CFD position, there is a risk/reward analysis to be done in deciding whether to hold a position over for the day and incur these additional costs.

We provide traders with the resources and knowledge to make these kinds of decisions, essential in forming a successful overarching trading style. While the answer to whether financing costs are acceptable is entirely dependent on the circumstances of a particular transaction, it nevertheless pays for traders to be conscious of the potential impact of financing costs on a given transaction.

CFD transactions are charged interest as a percentage calculated and applied daily. While this will be offset against previous-day profits, it increases the costs of holding a transaction and may have an impact on when to trade.