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CFD vs futures: how they differ, and who can trade them

Both let you trade a price without owning the thing behind it. The difference is who's on the other side of your trade, and whether you can use one at all.

Comparison · 6-minute read · Updated 2026-10-21

The short answer

A CFD (contract for difference) is a private deal with your broker. You and the broker agree to swap the difference in price between when you open and when you close. You never own the stock, index or commodity.

A Futures contract is a standard contract traded on an exchange. Every buyer and seller trades the same contract, and a clearing house stands between them.

One important fact: CFDs aren't available to retail traders in the US. US regulators don't allow them to be sold to everyday traders. They're common in the UK, the EU, Australia and other places.

Side by side

How a CFD works, in plain words

Say a CFD on an index is priced at 5,000 and you "buy" 1 unit worth $1 a point.

• The index rises to 5,050. You close. The broker pays you 50 points × $1 = $50, minus costs.
• It falls to 4,950. You close. You pay the broker $50, plus costs.
• You hold for 10 days. You pay a financing charge each night.

That's a math example, not a promise. The broker's price, spread and fees all affect the real result.

How a futures contract works, in plain words

Take the Micro E-mini S&P 500 (MES). Each full point is worth $5, and each 0.25 tick is $1.25.

• You buy 1 MES at 5,000. It rises to 5,010. That's 10 points × $5 = $50.
• It falls to 4,990 instead. That's −$50.

Your gains and losses settle into your account every day. The contract expires in March, June, September or December. Check cmegroup.com for current specs.

CFDs: strengths and limits

The good parts (where they're legal):

• Tiny sizes. You can trade very small amounts.
• Many markets. Stocks, indexes, forex and commodities from one account.
• No expiry on most CFDs.

The limits:

• Your broker is the other side. That's a conflict of interest, and the broker sets the price.
• Overnight financing adds up on longer holds.
• High leverage. In the EU, brokers must show what share of their retail CFD accounts lose money, and that share is high.
• Not for US residents. If you live in the US, an offshore CFD broker isn't a legal workaround.

Futures: strengths and limits

The good parts:

• Exchange prices. Everyone trades the same order book.
• Real volume you can study.
• Available in the US through registered brokers. See futures trading for beginners.

The limits:

• Fixed sizes. Even micros may be big for a tiny account.
• Expiration and rollovers to keep track of.
• Losses can exceed your margin in a fast move. See leverage and margin explained.

Which fits you?

1. You live in the US. Futures are the regulated route for leveraged index and commodity trading. CFDs aren't an option.
2. You live where CFDs are legal and your account is very small. CFDs allow smaller sizes, but compare the financing and spread costs carefully.
3. You want real volume and exchange prices. Futures give you both.

Wherever you trade, risk a small, fixed slice per trade and set your size from your stop.

Common mistakes

• Thinking a CFD means you own the stock. You don't. No voting, and dividends are only adjusted in cash.
• Ignoring financing. Holding a CFD for weeks can cost more than the spread.
• Signing up with an offshore CFD broker from the US. That's outside US protections.
• Treating futures margin as your maximum loss. It isn't.

Questions