Markets and Contract Structures · CFDs Trading Guide

A commodity CFD may follow a physical reference, a dated future or a provider constructed continuous price. Those choices change how holding returns behave.

Identify the reference market

An oil label alone does not tell you whether the contract follows Brent, WTI, a specific maturity or a continuous calculation. Metals and agricultural contracts also have different units and reference markets. Read the expiry, cash settlement method and point value. A retail CFD does not normally entitle you to collect the physical commodity.

Understand the curve

Different delivery months can trade at different prices because storage, financing, scarcity and seasonal demand differ. A later month above the nearby month is commonly called contango, while a later month below it is backwardation. The curve describes relationships across maturities, not a certain forecast of where the cash price will be.

Reconcile a roll or daily adjustment

If a reference switches from $70 to $72, the displayed price can rise without an equivalent economic gain. A provider may apply a corresponding adjustment or close and reopen positions under its method. Undated commodity pricing can include daily curve adjustments as well as an administration charge. Read price movement and cash entries together.

Test the commodity specific shock

Weather, storage constraints, production disruption and delivery bottlenecks can affect nearby contracts differently from later ones. A smooth historical series can hide these differences. Model wider spreads and adverse curve changes. Do not apply equity funding assumptions to commodities without verifying the exact formula and contract terms.

Try it yourself

A hypothetical continuous CFD rises by $2 solely from a reference switch. It represents 100 units and the provider debits $200 as the matching adjustment. What is the combined effect before fees?

Show the worked answer

The $200 price gain is offset by the $200 debit, leaving no gain from the reference switch alone. Market moves and administration charges remain separate.

Further reading

Educational material, not a recommendation to trade. Numerical examples are hypothetical. CFDs involve leverage and substantial risk of loss. Availability, costs and protections depend on the contract, legal entity, jurisdiction and client classification.

Continue learning