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I immediate loss when I purchase share CFD?


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Hi

I'm  using a demo account on an iPad. I've noticed often when I buy a CFD in a share, e.g. Apple, immediately it shows a loss on the P&L. Is that based on the difference between the buy price and the sell price? Is that called the spread?

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5 minutes ago, Mark8787 said:

Hi

I'm  using a demo account on an iPad. I've noticed often when I buy a CFD in a share, e.g. Apple, immediately it shows a loss on the P&L. Is that based on the difference between the buy price and the sell price? Is that called the spread?

Correct, you pay the spread on entry.

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1 minute ago, Caseynotes said:

Correct, you pay the spread on entry.

Aha. Thanks. And I've noticed sometimes it's smaller, sometimes larger. I suppose that's always something to consider before buying yes? I wonder then can the spread normally be expected to vary widely? Depending the particular underlying stock or are there other factors?

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4 minutes ago, Mark8787 said:

Aha. Thanks. And I've noticed sometimes it's smaller, sometimes larger. I suppose that's always something to consider before buying yes? I wonder then can the spread normally be expected to vary widely? Depending the particular underlying stock or are there other factors?

Yes spreads are variable, though usually they sit at the minimum they can rise for periods of increased volatility and/or decreased liquidity such as during market moving news events or for out of market hours trading, not good times for retail clients to be trading anyway. Increased spread represents increased risk and is initiated by the liquidity providers who provide IG with their prices, the degree of increase is a reflection of the degree of perceived risk and during extreme events can be very large.

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