Educational content. This article explains what a contract for difference is and how a CFD position is priced, using examples from the live Vanto feed. It does not constitute investment advice or a recommendation. CFD trading carries significant risk of loss and may not be suitable for all investors.
A CFD, or contract for difference, is an agreement between a trader and a broker to exchange the difference between the price of an asset when a position is opened and its price when the position is closed. The trader never owns the asset, and the contract is settled in cash. A rise in the price pays a long position and costs a short one; a fall does the opposite.
This article defines the CFD, works through three examples on live Vanto instruments, and lists what a CFD position costs and what it does not give the holder. The deeper mechanics, such as leverage, margin and contract size, have their own articles, and this page links to them instead of repeating them.
What Is a CFD?
A CFD tracks the price of an underlying asset: a currency pair, a metal, an index, a commodity or a cryptocurrency. Opening a CFD long ("buy") means taking the view that the price will rise, and opening a short ("sell") means taking the view that it will fall. Closing the position realises the difference between the two prices in cash, multiplied by the size of the position.
Two properties define the product. The first is the absence of ownership: there is no gold delivered, no share certificate and no wallet. The second is that the position is sized in lots, and the size of a lot is set by the contract size of the instrument. That is how a small deposit controls a large exposure, and it is also how a small price move produces a large profit or loss relative to the deposit.
Retail forex is the same instrument. A spot forex position on a trading platform is a contract on the exchange rate that is settled in cash, which is why forex, metals, indices, energies and cryptocurrencies all trade under the same rules on Vanto's MT5 platform.
How a CFD Position Is Priced
The profit or loss on a CFD position is:
(closing price - opening price) x contract size x lots, for a long position, and the reverse for a short one.
Three parts of the calculation matter. The price is quoted as a bid and an ask, so a long position opens at the ask and closes at the bid, and the gap between the two is the spread. The contract size converts a price move into money. And the number of lots scales both. The formula is the same on every asset class; only the contract size changes.
Three Worked Examples on Vanto Instruments
The examples use the live Vanto feed at 29 September 2026, 11:35 UTC, and the maximum leverage of each class. Prices are rounded and move continuously.
| XAUUSD (gold) | EURUSD | US500 | |
|---|---|---|---|
| Position | Buy 1 lot | Buy 0.1 lot | Buy 1 lot |
| Contract size | 100 troy ounces | 100,000 EUR per lot | 1 index point per lot |
| Opening price (ask) | 4,158.74 | 1.13495 | 7,708.78 |
| Notional value | about USD 415,874 | about USD 11,350 | about USD 7,709 |
| Maximum leverage | 1:500 | 1:500 | 1:100 |
| Margin locked | about USD 832 | about USD 22.70 | about USD 77 |
| Price move | +10.00 (to 4,168.74) | +0.0010 (10 pips) | +100 points |
| Profit or loss | USD 1,000 | USD 10 | USD 100 |
The last row is the point of the table. Gold's USD 10 move gains or loses USD 1,000 on a position that locked about USD 832. The gain or loss is calculated on the full notional value, not on the margin, and a move of the same size in the other direction costs the same amount. The margin only decides whether the account can carry the position; the margin table for every instrument shows what one lot locks across the whole feed.
What a CFD Holder Does and Does Not Get
A CFD position gives exposure to the price, not to the asset. Four consequences follow:
- No ownership rights. There are no voting rights and no delivery.
- Dividends are adjusted, not paid. On index CFDs, the broker credits long positions and debits short positions with an amount equal to the dividends paid by the constituents on the ex-dividend date. The CFD index trading guide covers the mechanism.
- Cryptocurrencies have no wallet. A crypto CFD gives price exposure without holding the coin; see crypto CFD trading.
- There is no purchase of the underlying to settle. The position is closed by an opposite trade, and the profit or loss is credited to the account balance.
What Holding a CFD Costs
The costs are separate from the price movement and add up in a few places:
- The spread, paid on every position at entry.
- Swap (overnight financing), applied to positions held past the daily rollover time. It can be a debit or a credit depending on the instrument and the direction of the position. The mechanism is in what is swap in trading.
- Commission, which applies on the Raw account; the Standard account has zero commission and a wider spread. The current terms are on the account types page.
- Dividend adjustments on index CFDs, which are a credit for longs and a debit for shorts.
The Risks Specific to CFDs
The product is a leveraged one, and three risks follow from that structure:
- Losses are calculated on the full notional. The gold example above lost USD 1,000 on a position with USD 832 of margin, and a loss can exceed the deposit.
- Gaps. A price can jump past a stop-loss between two quotes, especially over a weekend or around news, and the position then closes at the next available price.
- Automatic closing. When the equity falls below the required level, positions are closed by the platform. At Vanto the margin call level is 100% and the stop-out level is 50% on both account types; see what is stop-out level in trading.
The variables a trader controls are the position size and the stop-loss distance. The leverage ratio is a ceiling on what the account can hold, not a recommendation to use it. See what is a lot for how position size is chosen.
Frequently Asked Questions
What does CFD stand for?
CFD stands for contract for difference: a contract that pays the difference between the opening and closing price of an asset.
Do you own the asset when you trade a CFD?
No. The position gives exposure to the price only. There is no delivery of the asset, and the contract is settled in cash when the position is closed.
Can you lose more than you deposit on a CFD?
Yes. Trading on margin can result in losses greater than the amount initially deposited, which is why the margin call level, the stop-out level and the position size matter. This is stated in the risk warning at the end of this article.
Is forex trading the same as CFD trading?
On a retail trading platform, yes in structure: a forex position is a cash-settled contract on an exchange rate, priced and sized in the same way as a CFD on gold or an index.
Is a CFD the same as a futures contract?
No. A futures contract has a fixed expiry and a standardised contract traded on an exchange. Most CFDs on Vanto have no expiry date and are priced from the underlying market.
How much does one lot of a CFD control?
It depends on the contract size of the instrument: 100,000 units of the base currency on forex, 100 ounces on gold, 5,000 ounces on silver, one point on an index and one coin on a cryptocurrency. See what is contract size in trading.
Check the Numbers Before Trading
The Vanto trading calculator works out the notional value, margin, pip value and swap of any position at the live price, and the MT5 symbol specification shows the same figures inside the platform.
Risk warning. Trading securities, futures, options, and contracts for differences are complex financial instruments that require knowledge and understanding. Prices can fluctuate significantly and securities may become valueless. Investors may incur losses exceeding the potential for profits. Trading on margin can result in losses greater than the amount initially deposited. Past performance is not necessarily a guide to future performance. The information in this article is for educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any financial instrument. Consider whether CFD trading is appropriate for your circumstances and seek independent advice if necessary.