A US500 CFD and an ES contract track the same index and are not the same instrument. The point values, the financing, and the sizing arithmetic that follows from both.
Two traders are long the S&P 500 at the same level. One holds a single ES futures contract; the other holds fifty US500 CFDs. Their profit and loss move in lockstep for the rest of the session. Hold both for three weeks and they will have diverged, sometimes by more than the trade made, because one of them has been paying a financing charge every night and the other has not.
That divergence is not an exotic detail. It is the main structural difference between the two instruments, and it is the thing that decides which one suits a given strategy. Everything else in this post follows from getting the units straight first.
The word "lot" is the enemy of clarity in CFD trading, because it means a different quantity of exposure on every symbol and sometimes at every broker.
What you actually need for any instrument is one number: how much money one point of movement is worth on one unit of the thing you are about to buy.
For index CFDs the common convention is that one contract is worth one unit of account currency per index point. On that convention, a US500 CFD position of 1.0 gains or loses one dollar per point. Check it on your own broker rather than assuming — contract specifications are published per symbol in the platform, and index CFD multipliers do vary.
Now put the futures contracts next to it:
The arithmetic that follows is simple and worth doing once, properly. One ES contract is the exposure of fifty US500 CFDs on the convention above. One MES is the exposure of five. A trader who moves from MES to CFDs and keeps trading "one contract" has cut their exposure by 80 per cent; a trader who moves the other way and keeps the number has multiplied it fivefold.
With the index at 6,000 and a 20-point stop:
The CFD's advantage here is granularity. You can hold 3.4 contracts; you cannot hold 3.4 MES. On a 10,000 dollar account risking 1 per cent with a 20-point stop, the correct size is 100 dollars of risk divided by 20 points, which is 5.0 CFDs — or one MES, if your stop happens to land exactly there, and nothing at all if it does not.
The second unit confusion is leverage. Margin is what the broker asks you to post; notional is what you are actually exposed to. Only the second one can hurt you.
At the index level of 6,000, a 5.0 US500 CFD position on the one-dollar-per-point convention carries a notional of 30,000 dollars. At 5 per cent margin the broker asks for 1,500. On a 10,000 dollar account that looks like a modest position — 15 per cent of the account tied up — while the actual exposure is three times the account.
This is why leverage should never be the input to a sizing decision. The sequence that works is always:
Step four is the one that catches the trade where a very tight stop produces a technically correct but absurdly large position. A maximum-notional cap alongside your maximum-lot cap is cheap insurance.
WARNING
Available margin is not a budget. A platform that shows 8,500 of free margin is reporting what the broker will let you post, not what you can afford to lose. The two numbers have no relationship to each other.
This is where the CFD and the future genuinely part company.
A CFD index position is financed. You hold a position whose full notional you have not paid for, so the broker charges interest on it, applied daily at the rollover time. The usual structure is a benchmark rate plus a broker markup, applied to the notional and divided by 360 or 365.
An illustrative calculation, using a 4 per cent benchmark plus a 2.5 per cent markup on a 30,000 dollar long notional:
Those inputs are illustrative — your broker's benchmark, markup and day-count convention are published in its charges document and are the numbers that apply. The shape is what matters: the charge scales with notional and with time, and it is indifferent to whether the trade is working.
Two consequences follow. On an intraday strategy, financing is irrelevant — you never hold through the rollover. On a position held for a month, it is a material and entirely predictable cost that has to be inside your expectancy. And note that shorts do not automatically earn the mirror image: when the benchmark is low relative to the markup, both sides pay.
A futures position is not financed daily. The cost of carry is already inside the forward price, which is why a futures contract trades at a different level from the cash index. You pay it implicitly through that basis, and you pay an explicit cost only when you roll to the next contract at expiry — a spread and two commissions, four times a year on the quarterly cycle.
Index CFDs also carry dividend adjustments. When an index constituent goes ex-dividend, the index drops mechanically. Brokers compensate by crediting long CFD holders and debiting shorts by the index-point equivalent. This is not profit or loss, it is an adjustment that keeps the CFD honest — but it appears in your statement as a cash movement, and a journal that does not tag it will attribute it to a trade that did not earn it.
CFD index pricing is usually spread-only: the broker quotes a bid and ask wider than the underlying and takes the difference. Futures are commission-plus-exchange-fees on a market spread that is frequently one tick.
The comparison is size-dependent and there is no universal winner. At small size, the CFD's spread on a fractional position is often cheaper than a fixed per-contract commission. At large size, the fixed-cost structure of futures wins. The honest way to settle it is to compute your own cost per round trip at your own typical size, including financing for your typical holding period, and compare. Most traders have never done this arithmetic for their actual strategy, and it is an afternoon's work.
TIP
Record the spread at the moment of entry in your journal, not the average spread from the broker's marketing page. Index spreads widen at the session open, around the rollover, and through scheduled releases — which is exactly when a lot of entries happen.
A CFD index position held over the weekend is exposed to a gap on the Sunday open with no ability to exit in between. Stops do not help: a stop is an instruction to exit at the first available price past a level, and on a gap the first available price can be well through it.
This is a sizing question, not a tooling question. If a 2 per cent gap against you would be survivable at your current size, the weekend is a decision; if it would not be, the position is too large regardless of where the stop sits. Traders on funded accounts frequently have this decided for them, since many programmes do not permit weekend holding on standard account types.
None of this is difficult. It is arithmetic that most traders postpone because the platform lets them trade without it, and then they attribute the resulting drift to the market.
If you want to test any of this without capital at risk, cfd-demo-platforms-trend-tools covers what a demo environment can honestly tell you about spreads, timing tools and fills — and what it cannot. For the risk controls that sit on top of the sizing arithmetic here, mt5-risk-management-tools covers what a risk manager enforces on the terminal.
