Contract for Difference (CFD) Rules Explanation (TradFi Trading Complete Guide)

1、Basic Concepts | What is a CFD (Contract for Difference)?

A Contract for Difference (CFD) is a derivative instrument. You trade the price movements of an underlying asset rather than actually purchasing or holding the asset itself. Within a single account, you can trade global traditional financial assets—such as gold, forex, stock indices, and US equities — to profit from price fluctuations without owning the physical underlying asset. CFDs have no fixed expiry or settlement date, and all transactions are consolidated and settled in USD.

CFD stands for Contract for Difference, which is a standard spread-trading derivative in global traditional finance.

In simple terms: You do not purchase the underlying asset itself; instead, you profit from the price difference by forecasting whether the price will rise or fall.

• Go Long / Buy: Profit when the price rises; incur a loss when the price falls.
• Go Short / Sell: Profit when the price falls; incur a loss when the price rises.
• All profits and losses (PnL) are settled strictly based on the difference between the opening price and the closing price.

The Bitunix TradFi module integrates the traditional financial CFD framework into the platform, enabling unified account interoperability across crypto spot, perpetual contracts, and traditional financial CFDs.

2、Tradable Asset Classes

Can I still access Tradfi CFD if my region is a restricted region?

If your region is restricted, depending on your current positions and open orders, you may only be permitted to close or manage existing positions and will be prohibited from opening new ones. If a region is fully restricted, the trading gateway will be hidden entirely. Relevant notices will be displayed at the top of the order placement panel.

3、Core Features of CFDs (Essential for Beginners)

• No Physical Underlying Asset: You do not hold physical shares, gold, or foreign currencies. You only settle the PnL derived from the price difference.
• No Expiry Date: Positions can be held indefinitely. A position will only be closed via manual liquidation or when a forced liquidation (stop-out) is triggered.
• Leveraged Trading: Utilize a small amount of margin to control a large nominal position, amplifying both potential profits and losses.
• Fixed Leverage (Non-Customizable): Leverage tiers for each asset class are preset by the platform. Users cannot manually adjust leverage levels.
• Bidirectional Positions Supported: You can hold long and short positions for the same trading instrument simultaneously, allowing the system to automatically hedge risk.
• Non-24/7 Trading: Trading hours follow the market sessions of traditional finance. Holding positions overnight will incur swap fees.

Risk Warning: CFDs are leveraged, high-risk financial products. Even minor adverse market movements can lead to a total loss of your principal. Please fully understand the product rules and associated risks, and trade rationally based on your financial capacity.

4、Core Comparisons | CFDs vs. Crypto Perpetual Contracts

Key Differences:

• Perpetual Contracts: Native to the crypto ecosystem, trading 24/7 uninterrupted. They rely on funding rates to anchor prices to the spot market and offer customizable leverage.
• CFDs: Traditional financial derivatives that follow US equity and forex market sessions. They incur swap fees for overnight positions and feature fixed, non-adjustable leverage.

Key Differences Explained:

Completely Different Fee Structures

• CFDs: No funding rates apply. Instead, interest for holding positions overnight is charged via a daily Swap fee. Charges for weekends and holidays are consolidated and billed ahead of time.
• Perpetual Contracts: No swap fees apply. Instead, a Funding Rate settles every 8 hours to balance long and short contract prices (e.g., BTC/USDT Perpetual).

Distinct Trading Hours (The Most Direct Difference)

• CFDs: Trading is unavailable when US equity markets close or forex markets pause for the weekend. During market closures, you can only hold existing positions; you cannot open or close positions.
• Perpetual Contracts: Available 24/7/365, allowing you to trade at any time.

Varying Degrees of Leverage Flexibility

• CFDs: Employs stricter risk controls. Leverage is fixed to prevent users from over-leveraging and exposing themselves to excessive risk.
• Perpetual Contracts: Leverage can be adjusted freely, offering greater flexibility but carrying a higher risk of liquidation.

Ideal Use Cases

• CFDs: Suitable for swing trading, overnight position holding, and asset allocation into traditional financial instruments.
• Perpetual Contracts: Suitable for short-term intra-day trading, high-frequency execution, and speculative crypto trading.

5、How to get started with Bitunxi CFDs

Step 1: Regional Eligibility Check:

The system evaluates eligibility based on your login IP and Identity Verification (KYC) region. Restricted regions cannot open new positions.

Step 2: Complete Identity Verification (KYC)

Unverified users must complete KYC before activating a CFD trading account.

Step 3: Open a TradFi Account

Navigate to the activation portal, read, and accept the User Agreement to open your account.

Step 4: Transfer Funds & Start Trading

Transfer collateral to your TradFi account, select your desired instrument, and begin trading.

6、Account Rules | Margin & Account Status Explained

Definition of Key Account Metrics:

• Wallet Balance: Settleable available funds within the account, including deposits, withdrawals, realized PnL, and transaction fees.
• Account Equity: The total value of your account if all open positions were liquidated at current market prices.$$\text{Account Equity} = \text{Wallet Balance} + \text{Unrealized PnL}$$
• Unrealized PnL: Floating profit or loss of current open positions, fluctuating in real time with market conditions.
• Used Margin: The locked amount of margin required to maintain open positions, which cannot be withdrawn or used for new trades.
• Available Margin: Remaining funds available to open new positions or transfer out of the account.
• Margin Level: The core indicator of account risk. A higher percentage represents greater safety, while a lower percentage indicates a higher risk of liquidation.

Margin Level Calculation & Risk Tiers:

Leverage and Margin Tier Rules:

Each financial instrument employs a tiered margin structure. As the nominal value of your positions scales up, the Initial Margin Requirement (IMR) increases correspondingly, calculated progressively across tiers. The maximum leverage supported by an instrument is dictated by its tier-1 margin requirement (for instance, a 1% initial margin maps to a maximum leverage of 100x). Users cannot manually modify these leverage limits.

Long and short positions of the exact same instrument are net-hedged by lot size prior to calculating risk exposure. Consequently, holding bidirectional positions serves as a flexible risk management strategy.

7、Risk Controls | Margin Calls & Liquidation

Bitunix CFD utilizes a Cross Margin account-level risk control mechanism. Risk is evaluated across the entire account based solely on the overall Margin Level, rather than monitoring the PnL of individual positions.

Thresholds and System Triggers:

• Margin Level ≤80%:

Margin Call Warning. The system sends alerts via APP push notifications, inbox messages, SMS, and emails.

• Margin Level  ≤30%:

Forced Liquidation Trigger. The system automatically initiates partial or full position liquidation to reduce exposure.

Full Liquidation Process:

1. Warning: The account margin level hits the warning threshold, triggering automated notifications.
2. Trigger: The margin level drops to the liquidation threshold, initiating the stop-out sequence.
3. Position Reduction: The system closes positions incrementally according to a predefined sequence. The account's risk level is re-evaluated after each reduction. Liquidations halt immediately once the margin level recovers to a safe threshold.
4. Takeover: If the account risk cannot be mitigated through standard incremental reductions, the remaining positions are taken over by liquidity providers at the prevailing counterparty price.

Negative Balance Protection (Equity Compensation):

During extreme market anomalies or price gaps where account equity drops below zero, the platform automatically resets the negative asset balance to zero. Users will not owe additional funds to the platform, ensuring zero liability beyond deposited capital. All adjustments can be audited via the transaction history logs.

8、Trading Costs | Fee Structure Breakdown

CFD trading costs consist of Spreads + Swap Fees + Equity/Index Dividend Adjustments. No separate trading commission is charged during Phase 1.

1、Spread (Core Cost)

The Spread is the difference between the buying price (Ask) and the selling price (Bid), serving as the primary implicit cost of trading CFDs. When you open a position, your order fills at the counterparty price; hence, the spread is already baked into the quote and requires no separate payment. Spread sizes vary depending on the asset class, market liquidity, and trading sessions. You can view real-time spreads on the instrument details page.

2、Trading Commissions

Currently, no separate trading commissions are assessed. The primary transaction cost is covered within the spread.

3、Overnight Swap Fees (Swap)

Swap fees represent the time value (interest) of capital. Holding positions overnight incurs swap fees, which are debited or credited at a fixed settlement timestamp on days when traditional markets are open.

• Asymmetrical Long/Short Rates: Long and short positions utilize distinct swap rates. A positive rate yields interest income, whereas a negative rate incurs an interest expense.
• Settlement Timestamp: Fees are assessed on open positions at midnight local time of the settlement time zone (typically 00:00), accommodating Daylight Saving Time (DST) rollouts automatically.
• 3-Day Swap: Due to the standard T+2 settlement convention of traditional financial markets, positions held overnight on Wednesdays incur a triple swap charge to cover the weekend period.
• Holiday Pre-Collection: When encountering public holidays in an underlying market, swap charges are consolidated and billed on the trading day preceding the holiday.

Swap fees across different instruments follow distinct calculation models depending on their asset class (e.g., pips/points for Forex/Precious Metals, annualized percentages for Shares/Indices). Users can review the swap type and long/short rates on the instrument details page.

4、Dividend Adjustments (Applicable to Shares / Indices / ETFs Only)

Because CFDs trade price fluctuations without real asset ownership, the platform applies cash dividend adjustments on ex-dividend dates. This hedges the structural price drops caused by cash distributions, ensuring account equity equilibrium:

• Long Positions: Ex-dividend events typically cause equity prices to fall, leading to floating losses. The platform credits a dividend adjustment (credited post withholding tax) to your account as compensation.
• Short Positions: Ex-dividend events cause short positions to realize artificial floating profits. The platform debits an equivalent dividend amount from your account.

5、Fee Inquiry:

All itemized records—including swap fees, dividend adjustments, and realized PnL—are logged under Transaction History within the account assets portal, categorized by transaction type and instrument ticker.

9、Trading Sessions | Market Hours Guide

CFD instruments do not support 24/7 trading and strictly follow the schedules of global traditional financial markets.

• During Market Closures: You cannot open or close positions. Existing positions remain intact. Trading hours and respective time zones can be reviewed on the instrument details page (supports toggling between your local device time zone and the native market time zone).
• Market Close Identifiers: In market watch lists, instruments currently outside trading hours will display a "Closed" badge or appear grayed out.
• Overnight Swaps Apply: Market closures do not alter overnight swap accruals. Refer to the "Fee Structure Breakdown" section for more details.

Regarding Time Zones:

By default, the trading schedule adapts to your local device time zone. If device localization fails, schedules revert to Coordinated Universal Time (UTC) with explicit header labels. Market native hours adapt automatically to respective regional Daylight Saving Time (DST) schedules.

10、Frequently Asked Questions (FAQ)

• When trading CFDs, do I actually own the underlying shares or currencies?
• No. CFDs only settle the net price difference of an asset's movements. You do not hold physical ownership of the underlying asset, nor do you receive shareholder voting rights.

• Do CFDs have an expiry date?
• No. CFDs do not feature fixed delivery or expiry dates. Positions remain open indefinitely until you manually close them or a forced liquidation is triggered by account risk.

• Can I manually adjust my leverage?
• No. Every instrument is governed by a fixed default leverage tier determined by its margin requirements. Users cannot adjust leverage values manually.

• Can I hold long and short positions for the same instrument simultaneously?
• Yes. The system calculates net risk exposure based on your net position lot sizes, providing a flexible option for risk hedging.

• At what margin level will forced liquidation be triggered?
• When your overall account Margin Level falls to or below 30%, the system begins executing incremental or full forced liquidations. Prior to this, a Margin Call warning notification is dispatched at an 80% threshold.

• Why is a triple overnight swap fee charged on Wednesdays?
• This conforms to the standard T+2 settlement mechanism observed in traditional financial markets. Positions carried over Wednesday night roll their settlement cycle across the weekend, requiring a consolidated 3-day interest adjustment.

• Why did a "Dividend" transaction post to my Share/Index position history?
• This represents an ex-dividend adjustment. To negate the artificial price drop caused by corporate dividend payouts, the platform distributes adjustments to long holders and debits short holders to maintain account balance neutrality.

• Can I owe the platform money if my account gets liquidated?
• No. If extreme market volatility or price gaps result in a negative account balance, the platform applies negative balance protection to clear the deficit. Your loss potential is strictly capped at your account collateral limit.

• Can I execute trades while a market is closed?
• No. Opening and closing positions is disabled during market closures. Open positions will carry over securely until the next trading session resumes. You can check market operational windows on each instrument's detail tab.

• Where can I check my PnL, swap fees, and dividend adjustments?
• Navigate to the account asset screen and select "Transaction History". You can sort data by transaction type (Transfers, Realized PnL, Swap Fees, Dividends, etc.) and filter by specific instruments.

• What happens if my region becomes restricted for CFD trading?
• If your region is restricted, depending on your current positions and open orders, you may only be permitted to close or manage existing positions and will be prohibited from opening new ones. If a region is fully restricted, the trading gateway will be hidden entirely. Relevant notices will be displayed at the top of the order placement panel.

Disclaimer

This article is not intended to provide:

(i) investment advice or investment recommendations;

(ii) an offer or solicitation to buy, sell, or hold digital assets; or

(iii) financial, accounting, legal, or tax advice.

Digital assets (including stablecoins and NFTs) involve high risk and may be highly volatile. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. For your specific circumstances, consult your legal, tax, or investment professionals. You are responsible for understanding and complying with all applicable local laws and regulations.

About Bitunix

Bitunix is a global cryptocurrency derivatives exchange trusted by over 3 million users across more than 100 countries. At Bitunix, we are committed to providing a transparent, compliant, and secure trading environment for every user. Our platform features a fast registration process and a user-friendly verification system supported by mandatory KYC to ensure safety and compliance. With global standards of protection through Proof of Reserves (POR) and the Bitunix Care Fund, we prioritize user trust and fund security. The K-Line Ultra chart system delivers a seamless trading experience for both beginners and advanced traders, while leverage of up to 200x and deep liquidity make Bitunix one of the most dynamic platforms in the market.

Bitunix Global Accounts

X | Telegram Announcements | Telegram Global | CoinMarketCap | Instagram | Facebook | LinkedIn | Reddit | Medium