Getting started, in the right order

A contract for difference is an agreement to exchange the change in an instrument's price between opening and closing a position, settled in cash. Buy EURUSD and the euro strengthens: the difference is credited. It weakens: debited. You never own euros, gold bars, or shares, only the price exposure.

That structure is what makes one account able to trade currencies, metals, indices, energy, and shares through identical mechanics, and what makes shorting as simple as buying. It also means CFD positions are leveraged commitments, not assets; a position is not something you hold so much as something you are exposed to.

Three costs exist. The spread, the gap between buy and sell prices, is paid on entry. A commission, on raw-pricing accounts, is a fixed fee per lot each way. The swap is an overnight interest adjustment on positions held past the daily rollover, and can be a debit or credit depending on direction.

Every one of these is published on this site before you trade: spreads and swaps per instrument in the contract specifications, commissions per account tier in the comparison table. If a cost isn't in those tables, you don't pay it. That is the entire pricing model.

Leverage lets a margin deposit control a larger position, at 1:100, a $1,000 margin controls $100,000 of exposure. The market's percentage moves apply to the exposure, not the margin: a 1% favourable move doubles that margin; a 1% adverse move erases it.

Professionals use leverage to allocate less capital per idea, not to take bigger positions. If a position's size would frighten you unleveraged, leverage has not made it safer. It has only made it cheaper to enter.

A market order executes now, at the best available price: speed guaranteed, price not. A limit order executes only at your price or better. A stop order becomes a market order when its level trades, which is how both stop-losses and breakout entries work.

The stop-loss deserves its own sentence: it converts an open-ended risk into a defined one, and it is the difference between a losing trade and a damaged account. In fast markets stops can fill beyond their level (slippage), which is a reason to size positions carefully, not a reason to skip the stop.

Every durable approach to trading answers one question before entry: how much of the account does this trade risk if the stop is hit? Answering in percent, commonly one or two, forces position size to follow account size, which is the mechanism that survives losing streaks. Ten consecutive 2% losses leave 82% of an account; ten unsized losses may leave nothing.

Risk management cannot make a strategy profitable. It exists so that no single trade, streak, or news spike decides your outcome, so the account is still there when your judgement improves. Trade the demo until this chapter is a habit rather than a paragraph.