CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
When you hold a CFD position overnight, an overnight interest will apply. This interest reflects the cost of maintaining a leveraged position, as CFD trading involves borrowing funds.
How is overnight interest calculated?
The overnight financing cost depends on:
- Market Conditions: Interest rates, borrow fees, and other factors affect borrowing costs, which vary by instrument type.
- Static Markup: A fixed rate applied per instrument type.
Short position (SELL): Quantity x Price x Short position overnight interest x Number of Nights
Long position (BUY): Quantity x Price x Long position overnight interest x Number of Nights
If your account currency differs from an instrument’s quoting currency, the resulting interest is automatically converted using the current exchange rate. For Forex instruments, the rate is determined in the second currency of the pair. For example, in EUR/USD, the interest is calculated in USD, while for Shell PLC (CFD), it’s calculated in GBP.
How does overnight interest affect my account?
If the overnight interest rate is negative, a financing fee is deducted from your CFD account. If the overnight interest rate is positive, funds are credited to your CFD account.
Where can I find overnight interest rates?
These rates update daily and can be found in the Instrument Details section.
When is interest applied?
On regular weekdays, overnight interest is applied at 22:00 GMT from Monday to Thursday for positions still open at that time. For weekend positions, the fee is charged at 22:00 GMT on Sunday.
💡Example: Calculating the Overnight Holding Cost for a EUR/USD Position
For this example, the instrument is EUR/USD, and the position type is short (sell). The instrument price is 1.04055, and the trade size is 13,000. With an overnight interest rate of 0.0092% (0.000092) and a margin of €432.90, the system displays an overnight interest charge of—€1.19.
To check the system's calculation, we first find the position value:
Position Value = 13,000 × 1.04055
Position Value ≈ €13,527.15
Next, we calculate the annual holding cost:
Annual Holding Cost = €13,527.15 × 0.000092 × 365
Annual Holding Cost ≈ €454.82
Finally, dividing by 365 gives the overnight cost:
Overnight Cost = €454.82 ÷ 365
Overnight Cost ≈ €1.19
💡Example: Calculating the Overnight Holding Cost for stocks
For this example, the instrument is Tesla, and the position type is short (sell). The instrument price is $ 243.74, and the trade size is 10 stocks. With an overnight interest rate of 0.0251% and a margin of $ 112.32, the system displays an overnight interest charge of $ -0.57.
To determine the calculation, we find the position value first:
Position Value ≈ 10 × $ 243.74
Position Value ≈ $ 2437.4
Next, we calculate the annual holding cost:
Annual Holding Cost ≈ $ 2437.4 × 0.000251 × 365
Annual Holding Cost ≈ $ 223.26
Finally, dividing by 365 gives the overnight cost:
Overnight Cost ≈ $ 223.26 ÷ 365
Overnight Cost ≈ $ -0.61
Overnight Cost ≈ $ -0.61 × 0.92 ≈ € -0.57