What assets can you trade as CFDs?

In general, nearly every type of asset can be traded as a CFD (Contract for Difference).

When you buy the underlying asset itself, you acquire ownership of the physical or financial asset, such as a stock, commodity or currency. This means you have the right to receive stock dividends, take your gold to a bank vault, or use your crypto coins to buy things online.

However, when you buy an asset as a CFD, you merely enter a contract that mirrors the underlying asset's price movements, without having to bother with actual ownership. It is this ease and flexibility that has made CFDs so popular among traders and encouraged brokers to offer almost any tradable asset in CFD form.

Still new to CFD trading? Read our comprehensive overview of CFD trading basics.

Limitations of CFD trading

Although CFDs cover a wide range of tradable instruments, there are situations where trading some or all CFD types is not an option. First of all, availability can vary among brokers, with many focusing only on popular underlying asset types such as stocks or indices but failing to offer more niche CFDs.

Because of its risks, regulators are also increasingly stringent on CFD trading. For example, it is outright prohibited for US retail investors; the UK has banned crypto CFDs; while several EU countries have introduced restrictions on the sale and marketing of CFD products.

In the following chapters, we'll give you a near-exhaustive list of asset types that are suitable for CFD trading, ranked from the most widely traded to those that may be less familiar to the average trader.

There can be various arguments for or against trading an asset in CFD form rather than directly. These mostly revolve around the ease and risks of speculative CFD trading versus the benefits and burdens of more traditional ownership. We'll break these down below for many of the most popular asset types.

What's common in all asset types is that CFDs typically involve leveraged trading, allowing traders to control a larger position with a smaller upfront investment. This has the potential to multiply your profits, but it also carries higher risks due to the equal potential for amplified losses.

Stocks

Stocks represent ownership in a company and are traded on stock exchanges. Investors buy and sell stocks to capitalize on potential price appreciation or to receive dividends. Stock prices are influenced by factors including company performance, economic conditions and market sentiment.

Advantages of stock CFDs over stocks

• Risk hedging: you can take a short CFD position to hedge against a potential fall in the value of your real stocks.
• Flexibility: CFDs on shares allow more opportunities to adjust the position size.

Disadvantages of stock CFDs over stocks:

• Overnight fees: when trading CFDs, you have to pay a fee when holding a position overnight. These fees typically do not apply to regular stocks, making them much better suited for long-term investment.
• Dividends: unlike in the case of real stocks, you may not be eligible for full dividends when holding stock CFDs.

Indices

Indices are essentially baskets of assets, representing the performance of a group of assets, the entire market, or a special segment of the market such as a particular industry. By investing in indices, you esssentially purchase the underlying assets and become a shareholder in the companies in the index. Investing in indices is often a long-term investment strategy.

Advantages of index CFDs over indices:

• Shorting: CFDs make it possible to long or short indices, offering the ability to profit from both rising and falling prices.
• Cost efficiency: index CFDs are commonly traded without a commission, as trading fees are usually included in the bid-ask spread.

Disadvantages of index CFDs over indices:

• Reduced liquidity: index CFD markets may have lower liquidity compared to actual stock markets. This can lead to wider bid-ask spreads and increased slippage during rapid market movements.
• Limited market access: there is a smaller variety of index CFDs available compared to the number of actual indices.

Currencies (forex)

Currency trading involves buying or selling currency pairs, such as EURUSD or GBPJPY. Among others, currency markets are shaped by economic indicators and geopolitical events.

Advantages of currency CFDs over currencies:

• Shorting: the short and long selling of currency pairs is often more straightforward with CFDs than on the spot market
• Better regulations: the regulatory environment for CFDs is more uniform, transparent and predictable than the regulatory system for spot currency trading; with traders more likely to be eligible for investor protection.

Disadvantages of currency CFDs over currencies:

• Shorter market hours: while the forex market operates 24/7, the trading hours of CFD brokers may vary and are often limited.
• Additional costs: depending on your broker, CFD trading expenses are often more complex than forex costs, including spreads, commissions and overnight fees.

Commodities

Commodity trading is the exchange of raw materials like gold, oil, metals or agricultural products on organized markets. Traders seek profits from price changes influenced by factors such as supply, demand, geopolitics and economic indicators.

Advantages of commodity CFDs over commodities:

• Fewer entry barriers: CFDs on commodities allow you to start trading with a smaller initial capital, as you don’t actually have to own the assets directly or via complicated futures contracts.
• Liquidity, ease of trade: CFD markets typically have higher liquidity compared to commodity markets; it is also much easier to swiftly enter or exit positions than in the case of other forms of commodity trading.

Disadvantage of commodity CFDs over commodities:

• Exposure to market noise: compared with some other assets, the commodity market tends to be more exposed to news such as production forecasts, inventory levels or geopolitical events. Contradictory on unverified news reports often have an outsize impact on commodity prices; this in turn is amplified by leverage in the case of CFD trading, significantly boosting risk.

Cryptocurrencies

Crypto trading involves the buying and selling of cryptocurrencies, such as Bitcoin, Ethereum and others, on various online platforms known as cryptocurrency exchanges.

Advantages of cryptocurrency CFDs over cryptocurrencies:

• Simplicity: online brokers usually have user-friendly interfaces and processes, eliminating the need for complex crypto platforms and tech skills.
• Security: online brokers, regulated by top financial authorities, provide enhanced safety compared with crypto exchanges.
• Risk management: CFD brokers allow you to mitigate risks using strategies like stop-loss orders or negative balance protection.

Disadvantages of cryptocurrency CFDs over cryptocurrencies:

• Centralized platforms: CFD trading takes place on centralized platforms, and not on decentralized platforms favored by many crypto traders.
• Overnight fees: in certain cases, CFD positions may incur overnight financing costs or interest charges; this does not apply to spot crypto as the market is open 24/7.

Bonds

Bond trading involves buying and selling debt securities issued by governments or corporations, providing investors with periodic interest payments and return of the principal upon maturity.

Advantages of bond CFDs over bonds:

• Flexibility: can be traded with various durations, allowing for short-term or long-term strategies, while a real bond is typically held until maturity.
• Risk hedging: bond CFDs can be used as a tool for hedging against interest rate risk. If a trader holds real bonds and anticipates a rise in interest rates, they can use bond CFDs to offset potential losses by shorting the equivalent amount.

Disadvantages of bond CFDs over bonds:

• No ownership rights: bond CFDs do not entitle you to claim the principal amount upon maturity.
• No regular interest income.

ETFs

ETF trading involves buying and selling shares of exchange-traded funds. These funds themselves hold various underlying stocks and other assets, providing a diversified investment approach.

Advantage of ETF CFDs over ETFs:

• Hedging: ETF CFDs can serve as effective hedging tools, enabling traders to manage risk by taking short positions to offset potential losses.

Disadvantages of ETF CFDs over ETFs:

• Overnight fees: when trading ETF CFDs, you have to pay a fee when holding a position overnight; therefore they’re not suited for long-term investment.
• No dividends: unlike in the case of real ETF shares, ETF CFDs do not entitle traders to receive any dividend income generated by the assets within the ETF portfolio.

Futures

Futures contracts are agreements to buy or sell assets at a predetermined date in the future, with the price set at the present. The contract grants the right to the agreed-upon transaction but does not entail ownership of the actual asset. In futures CFD trading, traders do not acquire ownership of the real futures contract; rather, they engage in speculation solely on its price fluctuations.

Advantage of futures CFDs over futures:

• Accessibility: traditional futures contracts often have higher entry barriers, including minimum contract sizes and larger capital requirements.

Disadvantages of futures CFDs over futures:

• Complexity: most traders will find it difficult to oversee both the underlying asset and the corresponding CFD.
• Limited market access: futures contracts can be traded on organized exchanges, giving access to many markets. However, many online brokers only offer a limited selection of futures CFDs.

Options

Traditional option trading involves buying and selling contracts giving the right, but not the obligation, to buy or sell an underlying asset at a predetermined price within a specified time frame. Options CFD trading allows speculation on price movements of options contracts, without actual ownership.

Advantages of option CFDs over options:

• Lower costs: options CFDs generally have lower costs than traditional options.
• Flexibility: options CFDs offer more leverage and simpler short selling processes, and have more flexibility in terms of contract sizes and durations.

Disadvantages of option CFDs over options:

• Complexity: options trading itself can be challenging for most traders due to the variety of strategies that can be applied.

In addition to the commonly traded asset classes listed above, there are many others that are less popular and well-known but still have their own niche place in the market. They are typically available on fewer trading platforms and cover fewer underlying assets. Here are a few examples you may come across:

• ETN CFDs (Exchange Traded Note CFDs)
• Interest Rate CFDs (CFDs speculating on interest rate changes)
• VIX Volatility Index CFDs (CFDs covering the “Fear Index”)
• Carbon CFDs (CFDs tracking carbon emission prices)