Commodity trading explainedOil inventories fell, which is bullish, and the price dropped anyway. Commodities trade on the gap between what happened and what was expected - and on a curve most retail traders never look at.Futures vs CFDs
Both give you leveraged exposure in either direction. One is a standardised contract on a public exchange; the other is a private agreement with your broker. Almost every practical difference falls out of that.
A futures contract is standardised and exchange traded. The exchange sets the size, the tick, the expiry and the settlement terms, and every participant trades the identical instrument. Your counterparty risk sits with a central clearing system rather than with the person on the other side.
A CFD is over the counter. Your broker defines the contract and is your counterparty. There is no central exchange, no single price, and no clearing house between you.
That is the whole difference. Everything below is a consequence of it.
The structural comparison
Only the rows where the two genuinely differ. Both are derivatives, both are leveraged, both go long and short, and both can lose more than the margin posted, so none of that is listed here.
| Feature | Futures against CFDs |
|---|---|
| Where it trades | Futures: a central exchange. CFDs: privately with your broker. |
| Who defines the contract | Futures: the exchange, identically for everyone. CFDs: each broker, differently. |
| Counterparty | Futures: a clearing house sits in the middle. CFDs: the broker is the other side. |
| Price | Futures: one public order book. CFDs: each broker's own quote, derived from underlying markets. |
| Expiry | Futures: always. CFDs: cash contracts usually none, futures-based ones yes. |
| Position sizing | Futures: whole contracts only. CFDs: fractional, often to two decimal places. |
| Volume data | Futures: real, centralised, published. CFDs: broker-specific or tick volume only. |
| Financing | Futures: embedded in the contract price and the curve. CFDs: an explicit nightly charge. |
| Physical delivery | Futures: possible on some commodity contracts. CFDs: never, they are cash settled. |
The sizing problem, which is the real reason retail uses CFDs
A futures contract is an indivisible unit. If one contract moves $20 a point and your risk model says you should have $7 a point of exposure, you cannot trade 0.35 of a contract. You take more risk than you meant to, or you do not trade.
Exchanges have narrowed this with mini and micro contracts, and for some markets that has closed the gap almost entirely. But not every market has a micro version, and the smallest available contract can still be larger than a modest account should carry.
A CFD is defined by the broker, so it can be sliced. That flexibility is genuinely useful and it is also how a great many people end up in leveraged products they did not need.
Where standardisation forces the wrong position size
Same trade, same account, same risk limit. The only variable is whether the instrument can be divided.
$250 of planned risk, 20-point stop
- Futures contract value$5 per point
- Risk per contract20 × $5$100
- Two contracts2 × $100$200: under the limit
- Three contracts3 × $100$300: over the limit
The gap$50 of unused risk budgetYou cannot trade 2.5 contracts. A CFD priced per point can take exactly $12.50 a point and use the full $250. Whether that precision is worth the other trade-offs is the actual question.
Financing: visible in one, invisible in the other
A cash CFD charges financing overnight and shows it on your statement. It is easy to see, easy to resent, and easy to compare between brokers.
Futures do not charge a nightly financing line. This is regularly mistaken for futures being free to hold, and it is not. The cost of carrying the position is built into the relationship between contract months - the futures curve - so you pay it every time you roll from one expiry to the next.
Comparing a CFD's visible financing against a futures contract's absent financing line is comparing a cost you can see with a cost you have not looked for.
Comparing futures commission with CFD spread tells you nothing. They are different halves of two different bills.
Comparing cost honestly
Holding period changes the answer completely, which is why there is no general winner.
| Holding period | What actually dominates the cost |
|---|---|
| Intraday | Spread, commission, exchange fees and slippage. Financing is irrelevant if you close before the cut-off. |
| A few days | Still mostly transaction costs, with financing starting to register on a CFD. |
| Weeks to months | CFD financing compounds nightly. Futures need at least one roll, exposing you to the curve. |
| Longer | Futures roll economics against accumulated CFD financing. Neither is automatically cheaper. It depends on the market and the curve. |
A meaningful comparison includes spread, commission, exchange and clearing fees, financing, rollover, currency conversion and expected slippage. Most published comparisons include two of those.
Which is even available to you
Across the hundred brokers in our records, this is not a balanced choice. For most retail traders the decision is largely made by what their broker offers.
- 27of 100 offer futuresAnd several of those mean futures-referenced CFDs rather than exchange-traded contracts.
- 95offer commoditiesAlmost entirely as CFDs: the wrapper, not the underlying market.
- 3.5×the availability gapFor most retail accounts, CFDs are not the chosen route so much as the only one on offer.
Where futures are genuinely better
If your method depends on order flow, market depth or volume, futures are not merely preferable - they are the only option. A futures contract has one central order book with real published volume and open interest. Every participant sees the same book.
CFD volume is broker-specific or derived. It can be informative about that broker's flow. It is not the market's volume, because there is no single CFD market to measure.
The other case is size. Above a certain position, the transparency and depth of a liquid futures market matter more than the convenience of fractional sizing.
Choosing between them
Work down in order. The first two usually settle it.
- Can the smallest available futures contract fit inside my risk limit for this trade?
- Does my broker even offer futures on this market?
- How long am I holding: hours, weeks or months?
- Do I need real centralised volume and depth data, or can I work without it?
- Have I compared total cost over that period rather than one line of it?
- Am I comfortable with the broker as my counterparty, or do I want a clearing house in the middle?
Common questions
Are futures and CFDs the same thing?
No. They can produce similar exposure through completely different market structures: exchange-traded and standardised against private and broker-defined.
Does OTC mean unregulated?
No. It describes how the product is structured and traded. Regulated firms offer OTC products routinely.
Do CFDs expire?
Cash CFDs usually do not. CFDs based on a futures contract usually do. Never assume. Check the specification.
Can I take delivery of oil from a CFD?
No. CFDs are cash settled. Physical delivery is a futures phenomenon and only on deliverable contracts.
Do futures have hidden financing?
Not hidden, but not itemised either. The cost of carry is expressed through the difference between contract months, so you meet it at each roll rather than nightly.
Which is cheaper?
It depends on the market, the broker, the position size and above all the holding period. Anyone answering this question without asking how long you are holding is not answering it.
Are futures only for professionals?
No. Micro contracts have made several markets accessible at small size. The constraint is contract size against your risk limit, not your job title.
Which is safer?
Neither. Both are leveraged and both can lose more than the margin posted. Central clearing reduces bilateral counterparty risk on futures; it does not reduce market risk at all.
What is open interest?
The number of futures contracts still open. It is different from volume, which counts trading activity, a contract can change hands many times without open interest moving. There is no equivalent figure for CFDs.
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Nothing here is financial advice. Leveraged products can lose more than they make.
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