Standard contracts for difference (CFDs) are automatically terminated at a predetermined date. This is known as the CFD expiry date.
CFDs may come with a rollover option, which gives you the right to extend the contract if you so choose. Rolling daily CFDs are open-ended contracts which do not have a CFD expiry date, but are automatically rolled over from one trading day to another until they are terminated.
Before opening a CFD position, it is important to understand whether the CFD has an expiry date or whether it is a rolling CFD. If the CFD has an expiry date, the position will be closed on that date, regardless of whether the value of the underlying asset has gained or lost in relation to the position. This would not happen with a rolling CFD.
It is important to note that some brokers offer both CFDs with expiry dates and rolling CFDs. It is also important to note that expiry dates may vary between CFDs which have CFD expiry dates. For these reasons, carefully reviewing the terms and conditions of each CFD is crucial to successful CFD investment.
Example of a CFD with a CFD expiry date:
You open a position for a CFD which expires on a date 3 days after the date on which you open it. The underlying asset performs unfavorably across the 3 days, and on the CFD expiry date the position is automatically closed, resulting in a loss for you.
Example of a rolling CFD:
You open a position for a rolling CFD. The underlying asset performs unfavorably across the next 3 days. You choose to hold the position in hopes that rates will perform favorably in the future. If rates reverse and perform favorably at some point, you may be able to close the position at a gain.
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