An Overview of Interactive Brokers CFDs

Contracts for Difference (CFDs) are a type of derivative trading instrument that allow traders to speculate on the price movements of various assets without actually owning them. Interactive Brokers is one of the leading brokers in the CFD market, offering a wide range of products and services to its clients. In this article, we will take a look at what CFDs are, how they work, and why Interactive Brokers is an excellent choice for trading them.

What Are CFDs?

A Contract for Difference (CFD) is an agreement between two parties to exchange the difference in the value of an underlying asset at the time of entering into the contract and at its expiration date. The underlying asset can be anything from stocks and indices to commodities and currencies. With CFDs, traders can speculate on price movements without actually owning or taking physical delivery of the underlying asset.

How Do CFDs Work?

When trading with CFDs, traders do not own or take physical delivery of the underlying asset. Instead, they enter into a contract with another party who agrees to pay out any profits or losses based on whether the price movement was in their favor or not. For example, if a trader enters into a long position on a stock index CFD, they will make money if the index rises in value over time; conversely, if it falls in value then they will lose money.

Benefits Of Trading With Interactive Brokers

Interactive Brokers offers some unique advantages when it comes to trading CFDs:

- Low commissions: IBKR charges only $0.005 per share or $1 whichever is higher for US Share or Index CFD trades. This makes it one of the most competitively priced brokers in terms of commission fees.

- Wide range of products: IBKR offers access to contracts for difference in stocks, FX, metals and major market indexes where regulation permits. This means that traders have access to a wide range of markets and instruments which can be traded with ease using IBKR’s platform.

- Excellent customer service: IBKR has an excellent customer service team which is available 24/7 via phone or email to answer any queries that you may have about your account or trading activities.

FAQs About Trading With Interactive Brokers

What margin requirements do I need to meet when trading with IBKR?

The margin requirements vary depending on what product you are trading but generally speaking you will need to maintain at least 50% margin requirement when trading with IBKR's share CFDs.

Can I trade other instruments such as futures and options with IBKR?

Yes, you can trade futures and options as well as other instruments such as ETFs and bonds through IBKR's platform.

Is there any minimum deposit required when opening an account with IBKR?

Yes, there is a minimum deposit requirement when opening an account with IBKR which varies depending on your country of residence but typically ranges from $10 000 - $50 000 USD equivalent depending on your country's currency regulations.

Conclusion

Interactive Brokers offers some great benefits for those looking to trade Contracts for Difference (CFDs). They offer low commissions along with access to a wide range of markets and instruments which makes them an ideal choice for both experienced traders as well as those just starting out in derivatives trading. Furthermore their excellent customer service team ensures that all queries are answered promptly so that traders can get back up and running quickly should any issues arise during their trading activities.