Home Education What is CFD CFDs on ETF


Contracts for difference on exchange traded funds (ETF) are similar to equity CFDs and on the other hand are close to index investment. Index investment is often more profitable than investing in a separate share and the dynamics of a share index are better than those of a share and it is more stable.

However index investment is only affordable for large investors. Small investors cannot collect a large and diversified investment portfolio because of its high cost. The solution to this problem was found with the establishment of index investment funds. These funds hold stocks of all the companies included in one or another stock index, and the funds' shares themselves are sold and bought in a similar manner on the stock exchange.

The main advantage of an exchange traded fund or index share is that it is several times smaller than the underlying stock index and at the same time follows or replicates its movement. Exchange traded funds are more affordable and the same dynamic as the underlying index.

Forex Ltd offers the following CFDs on exchange traded funds:

  • #SPY (or as it is also called "Spiders") 1/10 of the underlying S&P 500 Index;
  • #DIA (or as it is also called "Diamonds") 1/100 of the underlying DJIA 30 Index;
  • #QQQ (or as it is also called "Cubes") 1/40 of the underlying Nasdaq 100 Index;
You can try trading CFDs on exchange traded funds by opening of a demo account, which will allow you to understand the nature and peculiarities of these financial instruments better and develop your own trading strategy.

Please note that open positions for CFDs are transferred to the following trading session with a rollover interest charge or credit. All pending orders, including Stop Loss, Take Profit, Buy Stop, Sell Stop, Buy Limit, and Sell Limit, are not transferred to the following day.


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