Perpetual CFDs and spread bets: a complete UK guide

CFDs and spread bets are complex instruments and come with a high risk of losing money rapidly due to leverage. 73.6% of retail investor accounts lose money when spread betting or trading CFDs with this provider. You should consider whether you understand how CFDs and spread bets work and whether you can afford to take the high risk of losing your money.

Perpetual CFDs and spread bets are high-risk leveraged products and may not be suitable for all investors. Before trading, you should read the relevant Key Information Document, product specifications, margin requirements, costs and charges disclosure, order execution policy and risk disclosure.

Perpetual (perp) CFDs and spread bets are derivatives that give you exposure to perpetual futures markets. Like any CFD or spread bet, they let you speculate on price movements without owning the underlying asset. You can go long or short with leverage, putting down only a fraction of the position’s full value. Leverage magnifies both potential profits and potential losses, and losses can occur rapidly. 

What sets them apart is what they track. Perpetual futures markets run around the clock, so you can trade them on weekends and public holidays, when most traditional markets are closed. They also let you take a view on companies before they list, through pre-IPO markets. And because the markets behind them are designed to run indefinitely, there’s no expiry date to manage either. 

In this guide, we’ll explain how perpetual CFDs and spread bets work, how they’re priced, how they compare to other products, the risks you need to understand and how to get started. 

A perpetual CFD is a contract for difference (CFD) that tracks a perpetual futures market – a market designed to run with no expiry date. Perpetual futures are like traditional futures in one respect – they let you trade on where a price is heading – but unlike traditional futures, they never expire. 

A perpetual spread bet works in the same way as a regular spread bet. You’re speculating on price movement rather than buying a contract, and you choose a stake per point instead of a contract size. 

Perpetual CFDs and spread bets bring perpetual futures markets into the Pepperstone account you already know. Rather than trading a perpetual futures contract directly, you trade an instrument that follows its price, on the same platforms and with the same margin rules as your other CFDs and spread bets. This means you get leveraged exposure in either direction, without owning the underlying asset, which can magnify both potential profits and losses. 

As with all CFDs and spread bets, you also do not receive any ownership rights, voting rights, delivery rights, custody rights or direct claim over the underlying market or asset referenced. 

Day to day, a perpetual CFD or spread bet behaves like any other traditional CFD or spread bet. When you open a position, your profit or loss depends on how the market moves relative to your entry price. If it moves in your favour, you may profit. If it moves against you, you may lose. 

Because they’re leveraged products, relatively small market movements can have a larger impact on your account balance. You may lose some or all of the money in your account. 

Four things set perps apart.

You can trade 24/7: Perpetual markets don’t follow standard exchange hours, so you can trade them around the clock – weekends and public holidays included.² You can monitor or open positions out of hours, rather than waiting for a market to reopen. That can reduce your exposure to weekend gaps, although gaps can still happen in fast-moving markets. 

The flip side is that 24/7 trading means 24/7 exposure. Out-of-hours markets can have wider spreads and lower liquidity, and your positions can be closed under margin rules while you’re away from the screen. 

You can trade companies before they list: Pre-IPO perps let you take a long or short view on a company’s expected valuation before it goes public. These markets are priced using a synthetic model rather than a traded share price, so there’s more pricing uncertainty than in a live market. We cover this in ‘Trading pre-IPO and synthetic markets’ below. 

Funding is set in advance. Because a perpetual market never expires, it uses a recurring payment, called funding, to stay in line with the price it tracks. On many native perpetual venues, funding passes between long and short traders several times a day, at a rate that keeps moving. That makes holding costs hard to predict. 

With Pepperstone, funding is translated into a single weekly funding rate, set in advance and applied in daily entries at 17:00 New York time. You can see your funding cost for the week ahead, rather than facing a charge that changes by the hour. Funding flows between longs and shorts, so depending on the market you may pay or receive it. We don’t add a mark-up to the rate. 

You can trade perps as either a CFD or a spread bet. The market, the 24/7 hours and the funding mechanism are the same. What changes is how you’re charged and how you size your trade. 

With a perpetual CFD, you pay the spread plus a commission. Commission is a percentage of the position’s notional value (lots × contract size × price), charged on each side – once when you open and once when you close. Rates run from 0.015% to 0.03% per side depending on the instrument, and apply to both Standard and Razor accounts. 

With a perpetual spread bet, there’s no commission. Opening and closing costs are wrapped into the spread, so the spread is your cost of trading. You choose a stake – the amount you win or lose per point of movement – rather than a lot size. 

In both cases, spreads are dynamic. They tend to tighten in calmer conditions and widen when markets get volatile, which can include out-of-hours trading. Neither option is cheaper in every case: commission and spread are two ways of paying for the same trade, so it’s worth comparing the total cost on the market you want to trade. 

Some perpetual markets are synthetic, which means their price comes from a model, a reference price or another methodology rather than a directly traded asset. Pre-IPO markets are the clearest example. They let you take a long or short view on the expected valuation of a company – such as Anthropic or OpenAI – before its shares are listed. 

In practice, that’s how a perp can give you exposure to markets you couldn’t reach through a traditional exchange. You’re trading a CFD or spread bet on a synthetic perpetual contract. You have no exposure to, or claim on, the company’s actual shares. 

The flip side is that there’s nothing tangible underneath. Synthetic prices can be indicative, estimated or model-derived rather than traded market prices, so pricing uncertainty is higher than in a live market. A synthetic market can also behave differently, and less predictably, than the real thing. And if the reference product is delisted – for example, because the company actually lists – your position closes at the last available price on the day of delisting. 

Perps sit alongside several other ways of trading the same markets, and knowing how they differ can help you choose the right one. Here’s how they stack up against three products traders often compare them with: cash CFDs and spread bets, traditional futures (and the forward CFDs and spread bets that track them) and perpetual futures.

Perps vs cash CFDs and spread bets

Perpetual CFDs and spread bets have a lot in common with cash CFDs and spread bets. Both are derivatives that let you speculate on price without owning the underlying asset, and both can be traded with leverage, long or short. The main difference is the market each one tracks: a cash CFD or spread bet follows a spot or cash market during its normal hours, while a perp follows a perpetual futures market that never closes. 

Perps vs traditional futures and forward CFDs

Perpetual CFDs, spread bets and futures all give you market exposure without ownership, but they’re built differently. A traditional future has a fixed expiry and trades on a futures exchange. As that date approaches, you’re forced to close or roll into the next contract, often at a cost. 

A forward CFD or spread bet tracks one of those futures contracts, so it rolls at expiry too. The cost of carry is built into the spread rather than charged separately. A perp, by contrast, has no expiry and trades through a broker, so there are no contract rollovers to manage or expiries to track. However, the position remains subject to margin requirements, funding adjustments, close-out rules, liquidity and product availability. 

Perps vs perpetual futures

Perpetual CFDs and spread bets track the same kind of market as perpetual futures, but they’re not the same product. You do not trade the underlying perpetual futures contract directly, and you do not own or hold any underlying asset or related token. 

If you’re coming from a native perpetual exchange, a few things change. There are no wallets or private keys to manage, and if a position goes against you, it’s closed through standard margin-call and stop-out rules. 

Perpetual CFDs and spread bets may only be appropriate for clients who understand leveraged trading, margin close-out, funding charges, 24/7 market risks, pricing methodology and the possibility of rapid losses. Before trading, you should consider whether you have read and understood the relevant Key Information Document, product specifications, costs and charges, margin requirements and risk disclosures. 

Like all leveraged products, perps are complex instruments and come with a high risk of losing money rapidly. Some risks are specific to perps, though, and it helps to know them before you trade. 

Risks specific to perps

• Reference market divergence: The price of a perp CFD or spread bet comes from a perpetual futures market. That market can itself drift away from the spot or traditional derivatives price of the same asset, which could lead to pricing outcomes that differ from what you expected.
• 24/7 and out-of-hours trading: Perpetual markets trade continuously, including weekends and public holidays. Prices can move sharply, and your positions can be closed out under margin rules, while you’re not watching. Out-of-hours markets can also have wider spreads and lower liquidity, which makes risk management tools such as stop-losses particularly important.
• Underlying market infrastructure: The perpetual futures markets we reference can have different liquidity, depth, trading rules and operations from regulated traditional markets. Disruption to those markets can affect our ability to price or offer perps.
• Synthetic and pre-IPO pricing: For synthetic and pre-IPO markets, the reference value may be indicative, estimated or model-derived rather than a traded price, so pricing uncertainty is higher. If the reference product is delisted, your position closes at the last available price on the day.
• Funding costs: We set the funding rate weekly and recalibrate it each week, so the rate – and whether you pay or receive it – can change from one week to the next. It’s applied daily to positions held past 17:00 New York time. Because there’s no expiry, a losing position keeps incurring funding until you close it or your margin runs out, and those costs reduce your account equity, which can bring margin close-out closer.

Margin and your potential liability

Margin is the deposit that keeps a leveraged position open. It isn’t a limit on what you can lose. We currently offer 2:1 leverage on perps, which can slow how quickly a market move eats into your margin, but it doesn’t remove the risk. 

• Losses can exceed your margin: Your profit or loss is based on the full value of the position, not the margin you put up. A move against you can lose more than the margin on that trade and, if the position stays open, use up the rest of your account balance.
• You may need to add funds: If your equity falls, you may need to deposit more to keep positions open. We endeavour to contact you if a position is at risk (known as a margin call), but we can’t guarantee to do so, especially if the market moves quickly or gaps.
• Positions can be closed automatically: If your account equity falls to a set level – normally 50% of your total required margin for retail clients – we’ll close your open leveraged positions under margin close-out. That could happen at a loss, and you can’t choose the closing price.

General risks of leveraged trading

• Prices can move quickly and sharply.
• Leverage magnifies losses as well as gains.
• There may be pricing, execution, slippage, platform availability and market disruption risks.
• Stop-loss orders and other risk management tools may help manage risk, but they do not guarantee that losses will be limited to a specific amount, especially in fast-moving or gapping markets.

• Perps are not suitable for all clients and should only be traded by clients who understand CFDs or spread bets, leverage, margin, funding charges and the risks of the relevant reference market.

There’s no one-size answer, as it comes down to how you like to trade. Perps may suit you if you want to react to news at the weekend, or manage positions outside exchange hours, or take a view on a company before it lists – as long as you’re comfortable with the added risks of 24/7 markets and synthetic pricing. 

They can also appeal if you’ve traded perpetuals on a native venue and would rather have a Pepperstone account, funding you know in advance and standard CFD risk treatment. If you mostly trade traditional markets during their normal hours, a cash CFD or spread bet may be the simpler fit – and plenty of traders use both, choosing the right tool for each trade. 

Choosing between a CFD and a spread bet comes down to how you want to be charged and how you like to size your trades. Whichever you choose, make sure you understand the margin requirements first. 

Getting started is much like trading any other CFD or spread bet. 

1. Open and fund an account: Choose a provider that offers perpetual CFDs and spread bets, such as Pepperstone, and complete the account-opening process. Perps are available on spread betting, Standard CFD and Razor accounts. If you’re not ready to go live yet, you can also try perps on a demo account first. 
2. Choose your market: Log in to TradingView, MT5 or the Pepperstone platform and search for instruments with the PERP suffix (.P on TradingView). Look over the available instruments, trading conditions, margin requirements and costs – including spread, commission (CFDs only) and funding. You should read the relevant key information document, product specifications and costs and charges information before trading.
3. Decide whether to buy or sell: Go long if you expect the price to rise, or short if you expect it to fall. Choose your size – lots for a CFD or a stake per point for a spread bet. Both long and short positions involve risk, and losses may occur quickly if the market moves against you.
4. Manage your risk: Use tools such as a stop-loss and size your position to suit your account and risk tolerance. A stop-loss order does not guarantee execution at your chosen price. In fast-moving, illiquid or gapping markets, execution may occur at a worse price than requested.
5. Monitor your position: Keep an eye on the market, your margin and any funding costs for as long as the trade is open, including overnight and at weekends. Because perps have no fixed expiry, positions can remain open and continue to incur costs until you close them, your position is closed under the applicable margin rules, or the product becomes unavailable.