What Can You Trade with CFDs? The Five Main Asset Classes

So, what can you trade with CFDs? Contracts for Difference (CFDs) allow retail traders to access a wide range of global financial markets across five main asset classes.

Contracts for Difference (CFDs) allow retail traders to access a wide range of global financial markets. A CFD is a derivative product that tracks the price movement of an underlying asset. This means you can speculate on whether its price will rise or fall without taking physical delivery or legal ownership of the asset itself.

However, CFD trading differs significantly from buying assets on the spot market. Each market available through a CFD platform has its own level of liquidity, leverage limits and holding costs. These factors can directly affect both your potential gains and your losses.

This guide explains the five main CFD asset classes, including how they work, the costs involved and the key risks to consider.

Quick Takeaways

• CFD trading covers five main financial markets: Forex, stock indices, global shares, commodities and cryptocurrencies.
• You do not buy or own the underlying asset. Instead, you enter into a cash-settled contract with your broker based on the difference between the opening and closing prices.
• Each asset class has its own margin requirements, risk profile and holding costs, including overnight fees.
• Volatile markets can increase the risks associated with leverage. Losses may build quickly, particularly if a stop-loss is not used or if a price gap causes it to be filled at a different level.

How CFD Markets Are Structured

CFD markets generally operate through an over-the-counter (OTC) network. This means traders enter into contracts with brokers or liquidity providers rather than buying and selling assets directly on a centralised exchange.

When you open a CFD position, you are not purchasing an asset from another investor through a public exchange. Instead, you enter into a bilateral contract with your broker, based on the prices available through its trading platform.

This structure gives traders access to thousands of international markets through a single margin account. These markets are usually grouped into different risk categories, which help determine the maximum leverage available and the margin required to open a position.

Highly liquid markets, such as major currency pairs, often have lower margin requirements and therefore allow higher leverage. More volatile or less liquid markets, such as cryptocurrencies, generally require a larger margin.

Understanding how margin and leverage differ across asset classes is essential for managing account equity and controlling risk.

Forex CFDs: Trading Global Currencies

A Forex CFD is a derivative contract based on the price movement of a currency pair. Instead of exchanging physical currencies as in the traditional spot forex market, Forex CFDs are cash-settled. This means you speculate on changes in the exchange rate without owning or exchanging the underlying currencies.

To understand the basics of what is forex trading, it is important to recognise one of its key advantages: market liquidity. The forex market is the world's largest financial market, operating 24 hours a day, five days a week. Its deep liquidity typically results in tighter spreads and more consistent trade execution during the busiest trading sessions, helping to reduce slippage under normal market conditions.

However, trading a forex cfd also means understanding overnight financing costs. Because currencies are traded in pairs, positions held beyond the broker's daily cut-off time may incur an overnight fee, also known as a swap. This charge is based on the interest rate differential between the two currencies, together with the broker's own adjustment. If you hold a long position in a currency with a lower interest rate than the one you are selling, these overnight fees can gradually reduce your available margin over time.

Index CFDs: Trading Stock Market Indices

Index CFDs allow you to speculate on the price movement of an entire stock market index, such as the FTSE 100 or the S&P 500, through a single position. Rather than buying shares in multiple companies individually, you gain exposure to the overall performance of the index.

Understanding what are indices in trading begins with knowing how indices are constructed. Most major indices are influenced by the performance of their largest constituent companies. Corporate earnings, sector performance and wider economic conditions can all affect index prices. For example, a significant change in sentiment towards large technology companies may have a much greater impact on a market-capitalisation-weighted index than on a price-weighted index.

In practice, many traders find that the greatest risks in index CFDs arise during corporate earnings seasons or major economic announcements, when overnight news can cause an index to open significantly above or below its previous closing level.

When developing strategies based on how to trade indices, it is also important to understand the difference between cash index CFDs and futures-based index CFDs. Cash index CFDs closely track the current value of the underlying index and usually incur overnight financing charges when held beyond the trading day. Futures-based index CFDs, by contrast, include financing costs within the futures price, so they do not normally attract daily overnight fees. However, they are subject to rollover costs when the underlying futures contract expires.

Share CFDs: Trading Company Shares Without Ownership

Share CFDs allow you to speculate on the price movements of individual listed companies without owning the underlying shares. You can take either a long or short position while gaining access to companies listed on stock exchanges around the world, without purchasing the shares directly.

Because you do not own the underlying shares, you do not receive shareholder rights, such as voting at annual general meetings. However, brokers usually make cash adjustments to reflect corporate actions. If you hold a long Share CFD position after the ex-dividend date, your account is typically credited with a dividend adjustment equivalent to the dividend payment. If you hold a short position, the same amount is generally deducted from your account.

One of the main risks associated with Share CFDs is the potential for significant price gaps when the market opens. Unlike the forex market, which operates continuously throughout the trading week, individual shares trade only during exchange hours. Unexpected company announcements, earnings results or other market-sensitive news released after the market has closed can cause a share price to open substantially higher or lower than its previous closing price.

In these situations, stop-loss orders may be executed at the next available market price rather than the level requested. In addition, traders holding short Share CFD positions may also incur daily stock borrowing fees, which can become significant if positions are held for an extended period.

Commodity CFDs: Trading Energy, Metals and Agricultural Markets

Commodity CFDs allow you to speculate on the price movements of raw materials without owning the physical assets. These markets are generally divided into hard commodities, such as gold and crude oil, and soft commodities, including agricultural products. Using CFDs removes the need to store, insure or take delivery of the underlying commodity.

Building a solid understanding of what is commodity trading highlights how strongly these markets are influenced by supply and demand, geopolitical developments and weather conditions. These factors can lead to rapid and sometimes unpredictable price movements. To trade commodity markets effectively, it is important to understand the characteristics of each market, as explained in guides covering how to trade commodities.

Some commodities require particular attention because they respond to different market drivers. For example, learning how to trade gold involves understanding how interest rates, inflation expectations and broader economic uncertainty can influence prices. By contrast, how to trade oil requires traders to monitor global production levels, supply disruptions, inventory data and geopolitical events.

Many Commodity CFDs are priced using the nearest active futures contract. As that contract approaches expiry, brokers typically roll positions into the next available contract. This rollover may result in price adjustments and additional costs, depending on the broker's pricing model.

Cryptocurrency CFDs: Trading Digital Asset Price Movements

Cryptocurrency CFDs allow you to speculate on the price movements of digital assets without owning the underlying cryptocurrencies. You do not need a crypto wallet or private keys, as all positions are settled through your CFD provider. This removes many of the practical challenges associated with storing and securing digital assets.

Trading crypto cfd trading involves one of the most volatile asset classes available. Cryptocurrency markets operate 24 hours a day, seven days a week, providing continuous trading opportunities. However, they can also experience sharp price swings and varying levels of market liquidity. During weekends or periods of reduced trading activity, wider bid-ask spreads may increase the cost of opening or closing positions.

In practice, many traders find that one of the biggest challenges of Cryptocurrency CFDs is the relatively high overnight funding costs charged by brokers to maintain leveraged positions.

Because cryptocurrencies are typically more volatile than traditional financial markets, overnight fees can be considerably higher than those applied to Forex, indices or shares. Given this extreme volatility, trading Cryptocurrency CFDs carries a risk of losing your entire invested capital, and losses can happen very quickly.

In addition, the risks associated with digital asset derivatives have led regulators in several jurisdictions to impose restrictions on retail trading. For example, the UK's Financial Conduct Authority (FCA) prohibits the sale of cryptocurrency derivatives, including Cryptocurrency CFDs, to retail clients (see the FCA's official policy statement).

Comparing CFD Asset Classes

Now that you know what can you trade with CFDs, choosing which CFD asset class to suit your needs depends on several factors, including your available capital, preferred holding period and tolerance for risk. Each market has its own characteristics, with differences in volatility, liquidity, margin requirements and ongoing trading costs.

The table below highlights the main features of each CFD asset class, making it easier to compare how they differ and which markets may be better suited to different trading approaches.

How to Manage Different CFD Asset Classes Safely

Trading CFDs across multiple asset classes means treating each position as part of your overall risk exposure rather than assessing trades in isolation. Since all open positions share the same margin account, a sharp adverse move in a highly volatile market, such as individual shares or cryptocurrencies, can quickly reduce your available margin. In some cases, this may trigger margin calls or the automatic closure of other positions, even if those markets remain relatively stable.

Managing this risk starts with adjusting your position size to suit the volatility and liquidity of each asset class. While holding positions across different markets may help diversify your exposure under normal market conditions, diversification does not eliminate risk. During periods of significant market stress, correlations between asset classes can increase, causing markets that normally move independently to decline or rise together.

It is also important to consider the cumulative impact of holding costs. Short-term trading may reduce financing charges, but positions held over longer periods can incur ongoing costs, including overnight fees, stock borrowing charges and futures rollover costs. Monitoring these expenses regularly can help prevent them from gradually reducing your trading capital.

Conclusion: Choosing the Right CFD Market for You

So, what can you trade with CFDs? To recap, CFD trading gives retail traders access to a wide range of global markets, including Forex, stock indices, shares, commodities and cryptocurrencies, through a single trading account. However, each asset class has its own characteristics, including different levels of liquidity, margin requirements, volatility and trading costs.

Before opening a position, it is important to understand how these factors affect the market you intend to trade. Developing this knowledge can help you make more informed trading decisions and manage risk more effectively.

This is education, not financial advice — we don't know your circumstances, risk tolerance, or local rules. CFDs are complex, leveraged instruments and most retail accounts lose money trading them; you can lose money faster than you expect.