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.