Why there is price difference between sell and buy prices in CFD?
That is called the spread. For CFD trading you pay the spread as a transaction fee.
But isn’t trading212 is commission free platform?
For invest account it is. As far as I know they make money using the spreads. So if you only use the Invest account, then everything is free.
The invest account also has spread between buy and sell prices, but the buy and sell differ by a smaller percentage than they do for the CFD on the same stock. The spread in the invest account differs from stock to stock according to the volatility and liquidity of the stock. In the invest account the spread provides profit for market makers. In the CFD account it provides profit for Trading 212. My understanding is that CFD providers do not actually hedge trades that clients place - they simply take the opposite position and know that in the average over many client trades they will make money on the spread. Commission is a charge made per trade and different to spread. On other platforms you might pay commission of as much as £11.95 per trade, whereas on Trading 212 you pay 0.
3 Likes
So can someone explain me how come the selling price of RDSB is fixed at shuch low (and does not change according market price fluctuations) as market buying price is in the sky? Contrary the RDSA is ok smth like ~0.01 eur difference. Sorry, but
Wtf?
Is it normal to have a Buy Price of $0.75 and a sell price of $0.65?
This seems like a huge difference to me.
What instrument, on Invest/ISA?
It’s on the Invest. It has changed to a more reasonable sell price now tho. It’s obviously something I will have to watch out for when selling.
Yeah whilst its cheeky you’ll find the spread will widen at volatile points or when liquidity is lower.