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FUTURES OR CFDs?

Both Futures and CFDs can be freely distributed in the EU. Together with funds and stocks they are on the MiFID list of eight instruments which can be provided to investors across the EU. Futures and CFDs are most often used to take positions with a short-term horizon.

Futures have been around for two centuries. They are listed on some well-known exchanges such as Eurex/Deutsche Börse (Frankfurt), Euronext (Paris) and CME (Chicago Mercantile Exchange). The order volume on these markets is huge. These exchanges are very mindful of the reputation they have established. The futures markets are therefore highly regulated and very transparent.

CFDs, short for Contracts for Differences, are a more recent financial instrument. They are not quoted on an exchange but offered over-the-counter by issuers and brokers. CFDs have taken the active investor world by storm. This is due to their numerous advantages, including very low transaction costs and an extremely broad product range. The main investors are retail clients; therefore, the brokers offer very small positions.

Both instruments allow the investor to use leverage, should he wish to do so. Using leverage means taking a position which is bigger than the account balance. Using leverage amplifies profits, but also amplifies losses. It works both ways. In the case of futures, using leverage can lead to losing more than the account balance.  The investor is always responsible for his account balance.

Investui clients can choose between a Futures account or a CFD-Forex account. The differences are limited. Both these are suitable to implement every Investui market alert.

Futures have the advantage of being quoted on an exchange. Their price is derived from all the orders sent by buyers and sellers to one exchange. CFD-Forex have the advantage of allowing smaller positions. Their prices are quoted by market makers and are either derived from listed instruments or, in the case of forex, from supply and demand.

We recommend a Futures account of at least € 25.000 or a CFD-Forex account of at least € 10.000. Smaller accounts are possible.