In plain English
What Overnight financing means
When you keep a CFD open overnight, the provider typically adjusts the position for financing. Long positions often pay a charge, while short positions may pay or receive an amount depending on interest rates and the broker’s methodology. The calculation is based on the contract’s notional exposure, not just the margin posted.
Why it matters
Overnight financing can materially change the economics of holding a CFD for more than a short period. It is one reason CFDs are often used for short-term exposure rather than long holding periods. The charge also depends on whether the position is long or short and on the instrument’s reference rate.
Example
If a long CFD has a notional exposure of 10,000 and the daily financing rate is simplified to 0.02%, the overnight charge would be 2.00 for one day, before any markup or administrative fee. A short position could be charged differently or credited, depending on rates and the provider’s policy.
Quick answers
Common questions
Is overnight financing the same as spread?+
No. The spread is an entry/exit cost in price; overnight financing is a time-based holding cost or credit.
Can a short CFD earn overnight financing?+
Sometimes. Whether you pay or receive depends on the instrument and prevailing interest-rate conditions.
Sources