CFD Vs. Futures…+ Trading levels for 10.25.2022

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CFD (Contract For Difference) OR Futures?

By John Thorpe, Senior Broker

Futures Market structure provides a more level playing field for the retail trader than do the Forex and CFD markets. Last week I focused on the differences between Forex and Futures and left a little on the table as it relates to CFD’s, what they are and more importantly what they are not. But again, the focus of last weeks article was not to discuss the differences as much as driving home the point that the futures market gives you, the retail trader, a better shake. It’s a fairer market and offers better opportunities for success, day in and day out.

First, the need to stress to you that futures markets, no matter what hemisphere they are traded in are regulated, CFD’s are not. In Fact, CFD’s are banned in the U.S. and Brazil..

Similarities between CFD’s and Futures:

1.      Leveraged products- you simply need to place a good faith deposit or Margin to speculate on a position.

2.      Multiple markets to trade, from Grains, to Softs, Equity indices to Debt instruments and Metals to Energies.

3.      Both used as hedges.

4.      Derivative’s Both derive their value from underlying instruments.

Differences between CFD’s and Futures

1.      Futures are regulated in the U.S. by both the CFTC and the NFA while CFD’S are not. This lack of oversight of the CFD industry creates transparency issues.  Regulated markets are far more transparent giving the trader of Futures an edge over CFD’s.

2.      Although futures contracts have expiration dates and CFD’s do not, the CFD broker will charge you a carrying charge to hold the position overnight, much like Forex operates.

3.      Futures contracts are more liquid than CFD’s. The Futures contract is a publicly traded entity where all market participants, Hedger’s Institutions, Banks, retail investors are involved in the price discovery process. CFD’s markets are literally bookmakers. You trade against the broker and the broker throws of his/her risk in the regulated futures markets. This results in very wide spreads between the bid and the offer and really penalizes the trader.

4.      Futures offer standardized contract sizes, and often times offering mini sized and micro sized contracts, much like the CFD market does, but again with a transparent market.

if you are looking for transparency and a more level playing field and scratched your head or pounded your fist on the desk because of the problems you may have experienced trading Forex or CFD’s you have nothing to lose, give us a call or send us an email and will work with you to get your account open and trading in a much fairer environment.

As always, plan your trade and trade your plan. Please contact your broker or Cannon Trading with any questions.

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.

Futures Trading Levels


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This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgement in trading.