Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% 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.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% 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.

CFDs on Commodities

Oil & Gas Products

What are CFDs?

A Contract for Difference (CFD) is an agreement made between the buyer and the seller of a specified asset. This agreement states that the seller will pay the buyer the difference in price between the asset’s value at the time the agreement was made and the asset’s value at present.

CFD trading is one of the most popular options for traders because you’re trading on price movements of an asset, without actually owning it.

Why trade CFDs on Commodities?

CFDs offer you easier and faster access to the commodities markets. As a result, it provides you with flexible trading opportunities that can diversify your investment portfolio.

With FXTM, you can choose to trade the following three CFD commodities:

  • UK Brent (Spot)
  • US Crude (Spot)
  • US Natural Gas (Spot)

Competitive Trading Costs

Our CFDs on Commodities are designed in a way that gives clients the same trading benefits as if they were trading instruments on the actual commodities exchange, but without the costs associated with connecting to the actual exchange.

Example: Buy 1 lot Crude

Deposit: $10,000

Open Price: 77.66

Close Price: 77.90

Notional Value ($) = Volume * Contract Size * Open Price = 1 * 1,000 * 77.66 = $77,660

Profit: (Close Price - Open Price) * Volume * Contract Size = (77.90 - 77.66) * 1 * 1,000 = $240

Costs

Swap: Volume * Swap Rate = 1 * -$45 = -$45

Commission: (Volume * Contract Size * Open Price) / 1,000,000 * Commission * 2 = (1 * 1000 * 57.66) / 1,000,000 * -20 * 2 = -$2.31

Cumulative Costs = Swap + Commission = -$45 - $2.31 = -$47.31

Cumulative Costs (%) = (Cumulative Costs / Notional Value) * 100 = (47.31 / 77,660) * 100 = 0.0609%

Cumulative Effect of Costs on Return (without fees) = (Profit / Deposit) * 100 = (240 / 10,000) * 100 = 2.40%

Cumulative Effect of Costs on Return (with fees) = (Profit - Cumulative Costs / Deposit) * 100 = (240 - 45 - 2.31 / 10,000 ) * 100 = 1.93%

Reduction of profit = 2.40% - 1.93% = 0.47%

 

Example: Buy 1 lot Crude

Deposit: $10,000

Open Price: 77.66

Close Price: 77.45

Notional Value ($) = Volume * Contract Size * Open Price = 1 * 1,000 * 77.66 = $77,660

Profit: (Close Price - Open Price) * Volume * Contract Size = (77.45 - 77.66) * 1 * 1,000 = -$210

Costs

Swap: Volume * Swap Rate = 1 * -$45 = -$45

Commission: (Volume * Contract Size * Open Price) / 1,000,000 * Commission * 2 = (1 * 1000 * 57.66) / 1,000,000 * -20 * 2 = -$2.31

Cumulative Costs = Swap + Commission = -$45 - $2.31 = -$47.31

Cumulative Costs (%) = (Cumulative Costs / Notional Value) * 100 = (47.31 / 77,660) * 100 = 0.0609%

Cumulative Effect of Costs on Return (without fees) = (Profit / Deposit) * 100 = (-210 / 10,000) * 100 = -2.10%

Cumulative Effect of Costs on Return (with fees) = (Profit - Cumulative Costs / Deposit) * 100 = (-210 - 45 - 2.31 / 10,000 ) * 100 = -2.57%

Reduction of profit = 2.57% - 2.10% = 0.47%

*For FXTM Invest, the Strategy Profit Share represents a percentage of the profits that will be awarded to the Strategy Manager for his/her positive performance. Example: If the above example refers to a profitable trade in FXTM Invest, and the Strategy Manager sets a performance fee of 20%, then the Client’s net profit would amount to: (Net Profit) - (Net Profit * 20% Manager fee) = (240 - 47.31) - (192.69 * 20%) = $154.15.

**Such estimations are based on assumptions and may deviate from costs and charges that will actually be incurred. Swaps and commissions may be subject to change. For more information please refer to our contract specifications and commissions pages. Transaction costs and fees incurred in currencies other than the currency of the account are converted on a real-time basis in MetaTrader, at no additional cost to the client.

Leverage

Leverage is fixed based on the trading instrument and limited with 1:10 maximum.

As with any leveraged products, there is a possibility for both increased losses and profits.

Fast Execution and Deep Liquidity

Our CFD commodities are tradable with both instant and market execution. FXTM’s commitment to efficient order execution, and super-fast execution for more precise trading.

Things to consider when trading CFDs on Commodities:

  • Whether you go short or go long, the same rules and margin requirements apply when trading CFDs.
  • The margin requirements for CFDs are lower than they are for the underlying asset. Click here for our contract specification details on CFDs.
  • Since you can take both short and long positions with CFDs, a falling market retains the same risks when it comes to incurring losses but it can also offer potential profit-taking opportunities.
  • The benefits of CFD trading is clear, but always remember that all leveraged assets have similar levels of associated risks and CFDs are no different.

For a full list of specifications offered by FXTM for CFDs on Commodities, please see the “Spot Commodities” tab in our Contract Specifications page, and click on each commodity for complete details.

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