CFD trading costs extend beyond the spread shown on the dealing screen. Commissions, overnight financing, currency conversion and other charges can turn a profitable price move into a disappointing account balance. The longer a position stays open, the more attention its funding terms deserve.
The practical question is not simply which provider advertises the tightest spread. It is what the complete trade will cost at your chosen size, in your account currency, over your expected holding period. This guide focuses on those calculations; the broader CFD trading guide covers the product and its risks.
What costs should a CFD trade include?
Separate costs into three groups: entering and leaving the position, keeping it open, and maintaining the account. A charge can sit outside the spread without being hidden, but it still belongs in your calculation. ESMA’s guidance on CFD cost disclosures identifies commissions, spread markups, financing charges and account fees as distinct items.
| Cost | How it affects the trade | What to check |
|---|---|---|
| Spread | The difference between the buying and selling prices | The spread during your actual trading hours |
| Commission | A separate transaction charge | Opening and closing charges, including minimums |
| Overnight financing | A debit or credit for holding past a funding cutoff | The calculation, rate, funding basis and chargeable days |
| Currency conversion | A cost when cash flows are converted between currencies | The markup and which amounts are converted |
| Other charges | Possible borrowing, data, stop or account fees | Whether they apply to your instrument and account |
Slippage also affects the result, although it is not a scheduled fee. It is the difference between the price you expected and the price at which the order executes. Keep it separate from explicit charges when reviewing trades, so poor execution does not disappear inside a miscellaneous “costs” figure.
Spreads and commissions: calculate the full transaction
Suppose an index CFD has a selling price of 7,999 and a buying price of 8,001. The spread is two points. At £3 per point, buying and immediately selling at those unchanged quotes produces a £6 loss before other charges.
That immediate round trip costs one full spread, not two. When measuring costs against the midpoint, you cross half the spread on entry and half on exit, assuming the spread stays unchanged. Adding two full spreads would overstate the cost.
Do not subtract the spread again if your profit calculation already uses actual opening and closing execution prices. Those prices already include it. This small bookkeeping mistake can make a trading journal look worse than the account statement.
Commissions need a separate calculation. If a hypothetical share CFD charges 0.10% per side with a £5 minimum, a £2,000 opening transaction costs £5 rather than £2. Closing at a similar value costs another £5. The minimum makes the round trip commission £10, or roughly 0.50% of the opening exposure.
Compare the resulting cash amounts, not just the advertised percentage. A minimum commission can matter more than the headline rate on a small position.
How overnight CFD financing works
Overnight financing is a contractual adjustment for maintaining an open position beyond the provider’s daily funding cutoff. It is not necessarily interest on the difference between your deposit and the position value.
Funding may be calculated on the full exposure without deducting cash held in the account. The FCA’s review of CFD pricing and value highlighted this calculation basis, differences between providers’ charges and weaknesses in their explanations. It also found that a short position could attract a charge at one firm and a credit at another.
For some cash share and index CFDs, the calculation uses a reference interest rate plus or minus a provider adjustment. Other instruments use different methods. A currency CFD, for example, may have a quoted swap amount rather than a simple annual borrowing rate.
If the terms name SONIA, that means the Sterling Overnight Index Average, a sterling borrowing benchmark administered by the Bank of England. It is not the provider’s final customer rate. The Bank of England’s description of SONIA explains the benchmark; your contract determines any additional charge.
A practical funding calculation
For a contract using a simple annual rate, an estimate is:
Funding charge = funding basis × annual rate × chargeable days ÷ annual day divisor
The funding basis may be the position’s daily notional value: its full economic exposure. The annual divisor may be 360 or 365. Use the contract’s stated method rather than choosing whichever produces the smaller number.
Assume a hypothetical £10,000 position, a total annual funding rate of 7.5% and a 365-day divisor. The rate is illustrative, not a current market quotation. Keeping both the rate and funding basis constant gives:
| Chargeable days | Estimated funding charge |
|---|---|
| 1 | £2.05 |
| 7 | £14.38 |
| 30 | £61.64 |
| 90 | £184.93 |
If the position requires £500 of margin, the £61.64 monthly charge equals about 12.33% of that initial margin. It remains only about 0.62% of the £10,000 exposure. Both percentages describe the same cash cost, but they answer different questions.
Margin is security for the position, not its purchase price. Keep that distinction clear when assessing CFD margin and negative balance protection. A smaller deposit does not make a given exposure cheaper to finance.
For a real trade, calculate each day separately if the rate or funding basis changes. Also check whether the displayed figure includes the provider’s adjustment: adding it again would double count the charge.
Funding cutoffs, weekends and changing rates
“Overnight” does not necessarily mean a position has been open for 24 hours. The relevant question is whether it remains open at the contractual cutoff. Check the stated time zone and whether its relationship to your local time changes during daylight saving transitions.
Weekend funding can be collected on a weekday. A three-day debit might therefore represent several calendar days rather than an unexplained increase in the daily rate. Check the instrument’s holiday schedule too, and do not assume every market uses the same collection day.
Rates may also change on existing positions. Financial Ombudsman decision DRN-4330543 on CFD overnight fees examined variable funding, weekday collection of weekend charges and a dispute about figures displayed before fees accrued. The practical lesson is to distinguish charges already incurred from estimates of future charges.
Closing before the cutoff may avoid that funding event, but closing and reopening creates fresh transaction costs and exposure to price changes while out of the market. Compare the full cost of both choices rather than treating funding avoidance as a saving by itself.
Short positions are not automatically cheaper
Do not assume selling a CFD means receiving overnight interest. Read the short-side rate separately from the long-side rate, including its sign convention. A platform may display a negative rate as a debit, while another presentation describes a positive number as the amount charged.
For share CFDs, distinguish financing from stock borrowing charges and dividend adjustments. A possible financing credit does not establish that the position earns money from being held. Other debits can outweigh it.
The treatment of these cash flows is covered in the guide to share CFD dividends, short positions and borrowing costs. For a cost estimate, record each adjustment separately rather than treating every debit as interest.
Cash CFDs versus futures-based CFDs
A product without a separate daily funding debit is not necessarily free to hold. When comparing cash and futures-based CFDs, examine the quoted prices, spreads, expiry terms and any rollover charges. The absence of one statement entry does not establish a lower total cost.
A useful comparison uses the same exposure and intended exit date. Estimate the cash CFD’s transaction costs and accumulated funding, then compare them with the dated contract’s transaction costs and any cost of maintaining exposure beyond expiry. Do not compare their price levels as though they were identical products.
Commodity contracts deserve particular care because a price adjustment associated with switching the underlying futures contract is not automatically a provider fee. Separate the mechanical adjustment from any spread or administration charge. The guide to commodity CFD prices and rollovers covers that distinction.
Ask for a worked example if the product documents do not make the treatment clear. “No overnight fee” answers only one part of the cost question.
Worked example: turning a market move into net profit
Consider a hypothetical index CFD worth £2 per point. Its opening midpoint is 5,000, giving £10,000 of exposure. Assume a one-point spread, no commission, seven chargeable funding days and the illustrative 7.5% annual rate used above.
For simplicity, assume the daily funding basis remains £10,000 and the spread stays at one point. The midpoint then rises by 30 points before you close.
| Calculation | Amount |
|---|---|
| Market movement: 30 points × £2 | £60.00 |
| Spread cost: one point × £2 | −£2.00 |
| Seven days’ financing | −£14.38 |
| Net profit before any other charges or tax | £43.62 |
The execution prices make the spread treatment clear. You buy at 5,000.5 and sell at 5,029.5. That produces a 29-point gain, or £58, before funding. Subtracting £14.38 leaves £43.62. There is no second spread deduction.
The estimated break-even midpoint move is total costs divided by the cash value per point: £16.38 ÷ £2 = approximately 8.19 points. A favourable move smaller than that still produces a net loss under these assumptions.
At 30 chargeable days, funding rises to approximately £61.64. The same 30-point market gain would then leave a £3.64 loss after the spread and funding. Being right about direction was not enough; the holding period changed the result.
Conversion charges and account fees
For a sterling account trading a dollar-denominated instrument, check which cash flows undergo conversion. These might include realised profit or loss, commissions and funding adjustments. Do not assume a conversion percentage applies to the full notional exposure unless the terms say so.
For illustration, a 0.5% conversion markup on a cash flow worth £100 costs £0.50. Applying it incorrectly to a £10,000 position would produce a £50 estimate. The percentage is meaningless until you identify its calculation basis.
Then check charges outside individual trades, including any market data subscriptions or inactivity fees. The FCA’s Consumer Duty letter to CFD firms identifies overnight holding costs, commissions and account dormancy charges as part of the total cost assessment, rather than treating spreads as the whole bill.
Build a cost estimate before opening the position
Use the same instrument, position size, direction, account currency and holding period when comparing providers or contract types. Otherwise, a lower estimate may simply reflect different assumptions.
- Calculate entry and exit costs, including minimum commissions.
- Estimate funding for the intended holding period and a longer alternative.
- Check weekend collection, variable rates and other instrument adjustments.
- Convert the total into cash and the price movement needed to break even.
After closing, reconcile the estimate against the account statement. Use actual execution prices, subtract separately posted charges and add any genuine credits. Keep market losses, transaction costs and financing in separate columns so you can identify what affected the result.
Retain the relevant fee schedule and transaction records alongside your CFD trading records. A clear cost calculation does not make a risky trade safe, but it prevents a small advertised spread from standing in for the complete bill.