A Contract for Difference (CFD) is an agreement to exchange the difference in value of a particular market between the time at which the contract is opened and the time at which it is closed. CFDs allow you to trade a wide range of markets (for example, and individual share or commodity), without physically purchasing the underlying instrument. With CFDs, you can make a potential profit if the market goes down (i.e. shorting) as well as up. A CFD guide is available from the educational section of our website.
CFDs, spread betting and Forex are leveraged products. This means that your exposure is magnified. Whilst this means that your profits can be bigger, your potential losses could also be magnified. Subsequently, these products are defined as high risk products and you can lose more than your initial investment when trading them. We offer you the option of using tools such as stop-losses, which are available to limit your maximum potential loss on each trade.
The spread is the difference between the price you can sell or buy an asset. This consists of the ‘bid’ and ‘offer’ prices.
This is the price at which you can sell to close an existing (long) position or open a new (short) position. When trading equities the bid price indicates a buyer in the market that is willing to pay the price in question for the shares. The bid price is usually lower that the offer/ask price.
This is the price at which you can buy to open a new (long) position or close an existing (short) position. When trading equities the offer price indicates a seller in the market that is willing to sell their shares at the price in question. The ask/offer price is usually lower that the bid price.
‘Shorting’ or ‘going short’ is simply the mirror image of buying an asset (e.g. a share). If an asset is held short and the price of the asset falls, a profit will be made. Likewise, if you hold a short position and the underlying asset rises, you will make a loss.
The mechanics of shorting or ‘going short’ theoretically involve borrowing an asset from one source, selling it to a third party and then buying it back at some point in the future (hopefully after the price has dropped) to return it to the initial holder. If the price has dropped and you buy the asset back for a lower price than at which you sold, you keep the difference.
Yes, it is possible to open a long position and a short position at the same time in the same asset (e.g. a share). This is known as a ‘Forced Open’ position.
You can either trade directly through your trading platform or call our traders who can place the order for you. We will also walk you through the platform and explain all the functions of trading until you feel completely comfortable with trading yourself.
Your positions will remain open until either you close them, a ‘stop loss’ or ‘limit order’ is triggered or the margin on the account falls below the minimum margin requirement level required to maintain your open positions, at which point the positions may be closed automatically.
Market/At Quote Order: A Market/At Quote Order is an instruction to immediately buy or sell at the prevailing market price. When you place a Market/At Quote Order a buy or sell order will be executed as soon as possible at the first available price.
Limit Order: A Limit Order allows you to set an order at a price different from the prevailing market price. This is used to achieve a price more favorable than the prevailing market price.
Stop Order: A Stop Order allows you to set an order at a price different from the prevailing market price. This is used to achieve a price higher/lower than the prevailing market price.
Many more order types are available for advanced traders. Please contact us for further information.
Yes, you can trade out of hours on selected instruments (e.g indices and currencies). You cannot trade equities out of market hours.
Yes, stop/limit orders placed on an open position will be cancelled automatically should one or the other get triggered first. However, an order to close a position placed via Direct Market Access (DMA) will not be cancelled in the event of a current working stop loss being triggered first.
Yes, you can select ‘trailing’ on the order ticket then choose the number of points you wish your stop loss to trail the market price. You can also add trailing stop losses to current open positions at any time.
Yes, guaranteed stop loss orders are available on a wide range of instruments. However, they are not available on all equities. Guaranteed stop loss orders carry an additional premium which can vary from 0.3% to 1% of the trade size (on equity CFDs) depending on the asset traded.
Yes, you can add, edit or remove stop losses and limit orders at any point via your trading platform or by calling you dealer.
Part of our duty to you is to make sure that you are fully comfortable with our trading platforms. Your trader will take you through the platform until you are completely comfortable with it.
Direct Market Access (DMA) allows the user to place an order for a share wherever desired, and in some cases even within the spread. For example, a trader without DMA can only buy a share at the offer price. With DMA, the trader can place an order on the book to buy at the current bid price or, if possible, within the spread. If the trader is filled on the order, a better price has been paid for the share than a trader without DMA who was forced to buy at market (on the offer).
The advanced charting package offers many technical indicators for you to use, as well as a range of drawing tools with adjustable time frames of historical data. We will provide you with easy-to-use charting packages that are ideal for the novice online trader, but which have the underlying depth of features to suit the professional trader.
A live level 2 feed is effectively a snapshot of what is happening on the stock exchange to one particular share at the present time, in terms of demand for the share and whether there are more prospective buyers than sellers, and vice-versa. The bid volume and price is shown on the left, the offer volume and price is shown on the right. Professional traders use this to evaluate supply and demand for a share, and therefore predict the possible next move of the share price. To simplify, if there are more prospective buyers than sellers for a share at one particular share price, one might anticipate an imminent share price rise.
LIBOR is the London Inter-Bank Offered Rate. This is the figure used when London banks lend between themselves, and is usually close to the Bank of England base-rate. It is also used to calculate the interest on overnight CFD financing.
When a long CFD position is held overnight, interest must be paid by the holder of the position. However, when a short CFD position is held overnight, the holder theoretically receives interest. It is worth noting that, in times of low interest rates, holders of short positions may be required to pay a small amount of interest. The interest paid is based on LIBOR +/- a premium.
At the current time, stamp duty must be paid when purchasing traditional UK shares at a rate of 0.5%. However, stamp duty is not payable on CFD or spread betting contracts, which can represent a significant saving. Tax laws may be subject to change.
As with standard shares, dividends are received on long equity CFD positions. Using CFDs, dividends are paid on the ex-dividend date rather than the dividend payment date, so there is no frustrating wait. Dividends must be paid by the holder of a short equity CFD contract.
At the current time, profits from CFD trading are subject to capital gains tax. However, losses can be offset against CGT. You are advised to consult a tax expert on this matter, as Accendo Markets is not authorised to offer tax advice.
Profits from financial spread betting are currently free of tax. You are advised to consult a tax expert on matters concerning tax as Accendo Markets is not authorised to provide tax advice.