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What CFDs Can I Trade?

What CFDs Can I Trade?
Written by Andy

When you are researching a CFD provider or two to open an account at, you should check to see if they give you the service that you are looking for. Most CFD providers offer UK and international CFDs, although there are still a few that only offer a localised offering. Thus, it makes sense to make sure that your provider offers a wide range of markets to trade, and you should be checking on this as it can vary between brokers.

What range of CFDs should my provider offer?

One of the advantages of opening a CFD account and trading CFDs is that you can have access to most of the financial markets in the world today. If you open an account with a specialist forex broker, well, you can trade in currencies, but you wouldn’t get very far if you wanted to trade other markets such as the FTSE 100 or commodities. If you opened an ordinary stockbroking account, you probably shouldn’t expect that forex or index trading will be available for you. This is not so with a provider who deals in contracts for differences where apart from shares, CFDs are usually offered over a wide variety of different instruments including currencies, commodities and indices.

Of course, if you have come to CFDs from a forex or share dealing background and are an experienced trader attracted to CFDs because of the leverage and flexibility that they offer, then you may prefer to keep on trading instruments that have already worked for you in the past. There is nothing wrong with keeping on trading the markets you are familiar with, and in fact you should be encouraged to do so. But when choosing a CFD provider you might want to leave the option open to explore other markets. In particular, you should decide whether these markets form part of your overall trading strategy as this may be a determining factor.

You will find that competition has meant that many CFD providers do offer a large range of underlying financial instruments for you to trade. It is not unusual for a single provider to offer many thousands of different CFDs, and brokers commonly will quote on shares, equity indices, commodities and foreign exchange. Even if they do, there are some differences that you should watch for if you intend to trade several different markets.

Take for example share or equity trading. The CFDs offered may be localised to your country, while other providers may offer CFDs over stocks listed on many global exchanges including access to USA equities. Some of the best publicized action takes place in these large markets, and you can find that you want to trade the news when a major US corporation has announcements to make.

Even if the CFD provider has offerings in the markets in other countries, you should look at the depth of those offerings. When CFDs were still in their infancy, not so long ago, most CFD provider only quoted blue chips like constituents of the FTSE 100 and to a lesser extent the FTSE 250 and indeed quite a number of providers still restrict their coverage to FTSE 350 companies which limits them to companies with a market capitalisation of around GBP180. If you wanted to trade CFDs on the UK AIM (Alternative Investment Market), which includes only small UK companies, then you would have been out of luck.

Nowadays, several CFD providers, especially the larger ones will also quote smaller caps. For instance IG Markets lists most UK shares including AIM companies up to a market capitalisation of GBP10 million. Not everyone needs to have access to all those markets, but if you think you might want to try trading in different markets from time to time, make sure that your chosen provider is able to support that.

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