CFD trading offers access to global markets such as shares, indices, commodities, forex, and cryptocurrencies—all without owning the underlying asset. For new traders, one of the first questions is what are CFDs, and how do their costs differ from traditional investing?
While many brokers promote “low-cost” or “zero-commission” trading, the real cost of trading CFDs is usually spread across several components. Understanding spreads, commissions, and swaps (and how they work together) is essential for managing risk and trading responsibly.
What Are CFDs and Why Do Fees Matter?
A Contract for Difference (CFD) is a financial derivative that allows you to speculate on price movements without owning the underlying asset. When you trade a CFD, you enter a contract with your broker to exchange the difference in price between the time the position is opened and closed.
Because CFDs are leveraged products, trading costs play a much larger role in overall performance. Fees can accumulate quickly, especially for active traders or those holding positions overnight. This makes understanding CFD trading fees just as important as understanding market direction.
Understanding CFD Trading Fees
CFD trading costs typically fall into three main categories: spreads, commissions, and swaps (overnight financing). Each affects your trading results differently depending on your strategy and time horizon.
1. Spreads: The Cost of Entering a Trade
The spread is the difference between the buy (ask) price and the sell (bid) price of a CFD. This is often the first cost you pay when opening a trade.
For example, if:
- EUR/USD is quoted at 1.1000 / 1.1001
- The spread is 1 pip
You effectively start the trade slightly in the negative, because you buy at the higher price and sell at the lower one.
Key things to know about spreads:
- Spreads can be fixed or variable
- Major instruments (like EUR/USD or the ASX 200) usually have tighter spreads
- Spreads often widen during high volatility, market opens and closes, and major news events.
2026 insight: Many ASIC-regulated brokers now publish average spreads, not just “from 0.0 pips,” which gives a more realistic view of trading costs.
2. Commissions: A Separate Trading Fee
Some CFD brokers charge a commission per trade, usually on top of tight spreads. This is most common on:
- Share CFDs
- Raw or professional-style accounts
Commissions are typically charged:
- Per side (opening and closing)
- As a fixed amount or a percentage of trade value
Example:
- $3 per side per lot
- $6 total for opening and closing the trade
When commissions make sense:
- You trade frequently
- You use scalping or short-term strategies
- You want access to raw institutional pricing
Important: A broker with slightly higher spreads but no commission can sometimes be cheaper than a raw-spread broker once commissions are included. Always compare the total cost, not just one fee type.
3. Swaps (Overnight Financing): The Holding Cost
Swaps, also known as overnight financing fees, apply when you hold a CFD position open overnight.
Because CFDs are leveraged products, the broker effectively lends you capital. The swap reflects:
- Interest rate differentials
- Broker funding costs
- Whether you are long (buy) or short (sell)
How swaps work:
- Charged or credited daily
- Usually higher on Wednesdays (to account for weekends)
- Vary by instrument and market conditions
Why swaps matter:
- Short-term traders may barely notice them
- Swing and position traders must factor them in
- In 2026, higher global interest rates make swaps more significant than in previous years
Most reputable brokers now provide swap calculators, allowing you to estimate holding costs before placing a trade.
Other CFD Fees to Be Aware Of
While spreads, commissions, and swaps are the main costs, some brokers may also charge:
- Inactivity fees (after months of no trading)
- Currency conversion fees (if your account currency differs)
- Guaranteed Stop-Loss premiums (optional risk protection)
- Market data fees (mainly for share CFDs)
ASIC-regulated brokers are required to disclose these clearly, but it’s still wise to read the product disclosure statement (PDS).
The “Total Cost” Mindset
Instead of asking: “Which broker has the lowest spreads?”
Ask: “What is the total cost of opening, holding, and closing this trade?”
The true cost of a CFD trade depends on:
- Spread at the time of execution
- Commission (if applicable)
- Swap fees if held overnight
- Slippage during volatile markets
This mindset helps you avoid marketing traps and choose a broker that actually suits your trading style.
A Smarter Approach to CFD Trading: Practical Tips
CFDs are complex, leveraged products and are not suitable for all traders. Trading responsibly means prioritising capital preservation over short-term gains.
- Use leverage conservatively
Higher leverage increases both potential gains and losses. Lower leverage provides more room for error. - Always use stop-loss orders
Stop-losses help manage downside risk and protect your account from sudden market moves. - Understand overnight costs
Avoid holding positions blindly without checking swap fees, especially for long-term trades. - Risk only a small percentage per trade
Many disciplined traders risk no more than 1–2% of their account on a single position. - Avoid overtrading
More trades do not necessarily mean better results. Quality setups matter more than quantity. - Trade markets you understand
Stick to instruments you follow closely and understand fundamentally and technically. - Use demo accounts before going live
Demo trading allows you to test strategies and understand costs without risking real money.
Trading CFDs With Clarity and Discipline
Understanding CFD trading fees is a critical step toward becoming a more informed and disciplined trader. Spreads, commissions, and swaps all influence your bottom line, and overlooking any of them can undermine otherwise solid strategies.
By adopting a total cost mindset and following responsible trading practices, traders place themselves in a stronger position to navigate the markets with clarity, discipline, and control—regardless of market conditions.
Author Bio: Carmina Natividad is one of the resident writers for FP Markets, a global Foreign Exchange (Forex) and Contracts for Differences (CFD) broker in Australia. Writing informative content about trading, investing, and personal finance is her cup of tea.