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Spot CFD vs Futures CFD - which one to trade?


Guest SaintPierre

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Guest SaintPierre

I am trying to figure out the practical difference between trading the spot vs the futures CFDs offered by IG. 

What I understand is that:

spot CFDs have a smaller spread than futures CFDs

spot CFDs have funding charges while futures CFDs do not

spot CFDs don't expire while futures CFDs at or around contract expiry get automatically closed and re-opened and the IG spread gets charged again

As a swing trader, with trades ranging in length between 3 to 10 days - therefore with the majority of trades not being around the futures contract expiry - am I better off using the spot or the futures CFDs?

Has anyone figured this out?

 

Thanks 😀 

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Hi @SaintPierre, you are correct in your understanding (above) though there are a few other considerations beyond length of time holding the trade open such as trade size, short or long and which market.

See this page on overnight funding  https://www.ig.com/uk/learn-to-trade/overnight-funding

The general consensus seems to be that if you are intending to hold for longer than 2-3 weeks you would be better off with futures or forwards (FX). 

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