CFD Trading for Beginners
Contracts for difference, also known as CFDs, allow investors to speculate on the price of financial markets without taking ownership of the underlying asset. CFDs are also usually traded with leverage, meaning clients can increase their position size (and potential profits), in return for a small deposit. Both characteristics make CFD trading popular with beginners.
This guide explains how to get started trading CFDs. We cover the merits and drawbacks of contracts for difference, beginner-friendly trading strategies, plus the top brokers in 2025. Use our CFD trading for beginners tutorial to get started.
Best CFD Brokers
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In our recent assessment, Pepperstone remains a top-tier CFD broker, renowned for its speed and reliability. With execution times averaging 30ms and a remarkable 99.90% fill rate, traders benefit from a smooth experience free from requotes and dealing desk disruptions. Additionally, it offers extensive opportunities with access to more than 1,300 assets.
FTSE Spread GBPUSD Spread Leverage 1.0 0.4 1:30 (Retail), 1:500 (Pro) Stocks Spread FCA Regulated Platforms 0.02 Yes MT4, MT5, cTrader, TradingView, AutoChartist, DupliTrade, Quantower -
XTB provides an extensive choice of over 2,100 CFDs, covering forex, indices, commodities, stocks, ETFs, and cryptocurrencies, depending on location. In the EU and UK, leverage is capped at 1:30, while global clients and professional traders can benefit from leverage up to 1:500. Renowned for its trading resources and tutorials, XTB excels in helping traders devise effective short-term strategies.
FTSE Spread GBPUSD Spread Leverage 1.8 1.4 1:30 Stocks Spread FCA Regulated Platforms 0.2% Yes xStation -
CMC enables trading of CFDs on over 12,000 assets, including currencies, indices, commodities, shares, ETFs, and treasuries. In 2025, new equities will feature sectors like quantum computing, AI learning, and digital car sales. Enjoy competitive spreads without hidden fees, and leverage the renowned MetaTrader 4 platform. Consistently, CMC stands out as a leading CFD broker.
FTSE Spread GBPUSD Spread Leverage 1 pt 0.9 1:30 (Retail), 1:500 (Pro) Stocks Spread FCA Regulated Platforms 0.02 Yes Web, MT4, TradingView -
FXCC provides a modest selection of CFDs beside forex, including metals, energies, indices, and cryptos. Nevertheless, it distinguishes itself by offering high leverage of up to 1:500. This feature appeals to seasoned traders wishing to enhance their purchasing power while betting on market fluctuations.
FTSE Spread GBPUSD Spread Leverage Variable 1.0 1:500 Stocks Spread FCA Regulated Platforms NA No MT4, MT5 -
Trade over 2,250 CFDs anytime from Monday to Friday across key markets, including forex, commodities, indices, stocks, and bonds. IC Markets leverages deep liquidity and cutting-edge bridge technology to offer ideal trading conditions for scalpers, hedgers, and algorithmic traders.
FTSE Spread GBPUSD Spread Leverage 1.0 0.23 1:30 (ASIC & CySEC), 1:500 (FSA), 1:1000 (Global) Stocks Spread FCA Regulated Platforms 0.02 No MT4, MT5, cTrader, TradingView, TradingCentral, DupliTrade, Quantower -
FxPro provides a vast range of CFDs, including forex, commodities, indices, shares, and futures, which have expanded over time. The broker excels in analysis and charting, thanks to Trading Central integration, advanced order types, and custom indicators.
FTSE Spread GBPUSD Spread Leverage 171.63 0.6 1:30 (Retail), 1:500 (Pro) Stocks Spread FCA Regulated Platforms Variable Yes FxPro Edge, MT4, MT5, cTrader, AutoChartist, TradingCentral, DupliTrade, Quantower -
IG provides over 17,000 CFDs, giving traders more opportunities than most brokers. Investors can trade long or short on key markets such as equities, forex, commodities, and cryptocurrencies. Additionally, customised price alerts and the IG Academy enrich the trading experience.
FTSE Spread GBPUSD Spread Leverage 1.0 0.9 1:30 (Retail), 1:222 (Pro) Stocks Spread FCA Regulated Platforms 0.02 Yes Web, ProRealTime, L2 Dealer, MT4, TradingView, AutoChartist, TradingCentral, ProRealTime -
IC Trading excels in CFD trading, offering more than 2,250 assets across popular markets such as forex, commodities, indices, stocks, and bonds. With advanced bridge technology and substantial liquidity, the broker ensures favourable conditions for traders seeking leveraged short-term opportunities.
FTSE Spread GBPUSD Spread Leverage 2.133 0.23 1:500 Stocks Spread FCA Regulated Platforms Variable No MT4, MT5, cTrader, AutoChartist, TradingCentral -
Eightcap provides an extensive selection of trading options with over 800 CFDs covering equities, indices, bonds, commodities, and digital currencies, subject to regional availability. Traders can access leverage ranging from 1:30 to 1:500. The platform is distinguished by its sophisticated tools, including an AI-powered economic calendar that tracks over 25 countries with filters for varying impact levels. Despite these strengths, Eightcap's selection of commodities, especially softs such as cotton and wheat, along with its range of precious metals and energy assets, remains limited and could benefit from further development.
FTSE Spread GBPUSD Spread Leverage 1.2 0.1 1:30 Stocks Spread FCA Regulated Platforms 0.03 (Apple Inc) Yes MT4, MT5, TradingView -
With options for both long and short positions on over 5,500 CFDs in forex, stocks, indices, commodities, and cryptocurrencies, FOREX.com stands out. The platform's unique Web Trader delivers an outstanding experience, featuring more than 80 technical indicators and average execution speeds of merely 20 milliseconds, providing an ideal setting for dedicated traders.
FTSE Spread GBPUSD Spread Leverage 1.0 1.3 1:30 Stocks Spread FCA Regulated Platforms 0.14 Yes MT4, MT5, TradingView, eSignal, AutoChartist, TradingCentral
CFD Trading Basics For Beginners
CFDs are placed using the trader’s understanding of the market, and the trader is hoping that the price of the underlying asset will rise or fall so that the position can be sold for a profit. Investors make money from the difference between the buy price and the sell price.
Because CFDs are leveraged products, there are also financing costs that must be paid on the borrowed funds that the broker provides. The formula to work out your returns when CFD trading is:
Closing sell / buy price – initial buy / sell price – (interest x number of days) – transaction costs = profit/loss
Importantly, CFDs are different from shares because there is no yield, so you can only make money from the transaction itself. This is because CFDs are a derivative – the trader does not actually own the underlying asset, for example a UK stock or gold. Instead, traders simply speculate on the price.

Credit: Skilling
Trading On Margin
Margin trading refers to investing a percentage of the total cost of an asset, and having the rest lent to you by a broker. This allows traders to take on bigger positions when they don’t necessarily have big capital to invest. The percentage paid by the investor is determined by the broker, regulatory requirements, and the asset traded, but typically it’s between 5% and 20% of the total position size. If the market moves in the way you have predicted, you can keep the return, and pay the same amount of money back to the broker (minus any fees).
Importantly, most FCA-regulated brokers cap leverage to 1:30 for retail traders. As outlined above, margin trading opportunities also vary depending on the asset traded, with most brokers offering lower leverage rates on volatile markets like cryptos.
Let’s look at an example of a leveraged CFD trade:
If you are looking to buy a share in a company that costs $200, and your broker offers CFDs with a 20% margin, then you are able to buy one share for $40 while your broker lends you $160. If your position is closed when the share price is $250, then you return the same $160 to your broker, get your $40 investment back, and also get the additional $50 from your trade. Subtract any fees, and that is what you are left with.

Credit: CMC Markets
The downside of margin trading is that the borrowed money always needs to be returned to the broker, even if the market moves against you. As a result, leveraged CFD trading can lead to large losses if a careful approach to risk management isn’t taken. Fortunately, many of the best CFD brokers offer negative balance protection, meaning you cannot lose more than your account balance.
How To Start CFD Trading
The first decision is which broker to sign up with. A useful tip is to find a brokerage that offers a free demo account. This will let you practice trading CFDs with virtual funds and gives you the opportunity to find a strategy that works, without risking your own money. You can then upgrade to a real-money account when you feel confident.
Here are a few other things to keep in mind when choosing a CFD broker:
What Are The Fees?
Brokers don’t tend to charge sign-up fees for CFD trading accounts. This is because platforms often make their money from spreads, commissions and margin losses. All of these costs should be compared. It’s also worth checking for deposit and withdrawal fees, plus hidden charges like account inactivity penalties.
Is The Platform Beginner-Friendly?
Some platforms are not suitable for CFD trading beginners. One terminal that is, however, is MetaTrader 4. MT4 is offered by many of the top brokers and provides a user-friendly interface alongside a decent breadth of analysis tools. Users benefit from 3 execution modes, 2 market orders, 4 pending orders, 2 stop orders and a trailing stop. Multiple charting views, including basic candlestick charts, are also provided.
MT4 is available as a software download, browser terminal, plus via a mobile app. And because it’s so popular, there is a wealth of guides and tutorials online to help beginners get started.
Are They Reliable?
Unfortunately, not all CFD brokers can be trusted. This is why it is important that British traders sign up with a brokerage regulated by the Financial Conduct Authority (FCA). This will provide new traders with several benefits, from negative balance protection and segregated client accounts to a ban on misleading promotions and a cap on trading leverage.
CFD Trading Strategies For Beginners
When looking at trading CFDs for beginners, there are two basic approaches for novices to get familiar with:
Long Buy
A long buy position is taken when you believe the value of an asset will rise. Let’s say you think the value of oil will increase following supply and demand challenges caused by the Russia-Ukraine war. A long CFD position could see you generate a return if the price increases beyond its current value.
Note, when we refer to buying, we are referring to opening the position, which does not actually mean you are purchasing the underlying asset (barrels of oil). What you are purchasing is a contract that allows you to exchange the difference in price between when you open the contract and when you close it.
Short Sell
The short sell might appear to be the more complicated strategy for CFD trading beginners, but the best way to look at it is as a reverse long buy. When you short sell, you borrow the asset in order to sell it, before buying it back at a lower price further down the line. This is done when you believe that the value of the underlying asset is going to decrease.
So, if you believe that the value of Bitcoin will decline, then opening a short position with a CFD could lead to a profit. If the price of BTC does indeed drop, then you will make money equivalent to the difference in unit price at open compared to the current price, multiplied by the size of the position, minus any broker fees.

Credit: IG
Learning
Having a basic strategy is a great place to start as a beginner to CFDs. But unless you continue to consume relevant material and commit to learning, you may see limited returns. We recommend setting aside time every week to get better acquainted with CFDs through the following:
- Books – Books are one of the best ways you can immerse yourself in CFD trading. There are lots of great CFD trading books out there that come in the form of eBooks, audiobooks and physical copies, and many are specifically aimed at beginner traders. Content can cover everything from leveraged trading to risk management.
- Courses – Courses are a great alternative to reading website content about CFDs or watching YouTube videos. Many courses are enough to help you progress from the beginner stage of CFD trading towards more advanced strategies and setups. Find a course from a highly rated provider that aligns with your budget. Note, some leading CFD brokers also offer free trading academies and tutorials when you open an account.
- Online Community – Beginners can also turn to active investing communities available on social media channels and trading forums. Another great place to start is copy trading platforms. These applications allow traders to engage with experienced investors while mirroring their positions and strategies.
CFD Trading Tips For Beginners
It can be daunting to start trading with CFDs as a total beginner, however, with a supportive broker and the right mindset, it is possible to make money. We have also compiled a list of tips for CFD trading beginners.
Setting Up
One of the most important things to do before opening any positions is to research the market and confirm your predictions with technical and fundamental analysis. Also make sure you utilise stop-loss and take-profit orders to protect potential profits and limit any losses.
Discipline
When you start out, it’s easy to listen to a gut feeling or give in to emotions like fear or greed. However, this can derail an effective strategy and dampen the trading experience. Try and stay disciplined and follow your original approach. You can then review your progress and amend your trading system after it has run its course.
Broker
Finding a CFD broker might seem more like a formality than an important decision, but it can have a significant impact on your trading experience. Brokerages offer access to different markets with various fee structures, leveraged trading opportunities, supporting tools and more.
With this in mind, sign up with a reliable brand that comes recommended. Use our list of suggested brokers to start on the right foot.
Leverage
The leverage aspect of CFD trading can make investing risky. Beginners may not want to use all the leverage offered by an online broker. It’s also worth testing trading on leverage in a demo account before investing real money. This will help you understand the impact leverage can have on potential profits and losses.
Note, many of the top CFD brokers will lower your available leverage if you contact their support team.
Bottom Line On CFD Trading For Beginners
CFD trading for beginners can be a lucrative way to get into investing in the financial markets. Traders make a simple prediction on the value of an asset without actually taking ownership of the stock, precious metal or currency, for example. Trading on margin also means novice investors can get started with a relatively small capital outlay.
Use this beginner-friendly guide to trading CFDs to get started today and check out our list of recommended brokers here.
FAQ
What Are CFDs?
CFDs are contracts between an investor and a financial broker where both parties agree to exchange the difference between the opening price and the value of the asset when the contract is closed (minus any fees). CFDs are usually traded with leverage, meaning clients only need to put down a small amount of the total position size.
What Markets Can CFDs Be Used To Speculate On?
Novice traders can use contracts for difference to speculate on a long list of markets, from equities and commodities to forex and cryptocurrencies. Market access varies between brokers so make sure you check out reviews and ratings before opening a live account.
Are CFDs Legal In The UK?
It is legal to trade CFDs in the United Kingdom. However, not all online brokers and trading platforms are regulated by the country’s financial watchdog – the Financial Conduct Authority (FCA). Trading CFDs with a regulated firm normally provides retail investors with better trading conditions and greater customer protection.
Can You Make Money With CFDs?
Trading CFDs can be profitable, but it can also lead to large losses. The leverage element, in particular, makes contracts for difference a risky product. That’s why beginners may want to start with a demo account to build up their market knowledge and confidence.
Is CFD Trading Good For Beginners?
CFDs appeal to beginner traders for several reasons. Firstly, most brokers offer leveraged CFD trading, so investors only need to deposit a small amount of the total position, usually between 5% and 20%. CFDs are also a derivative, meaning traders don’t actually take ownership of the underlying asset, for example a precious metal like gold or silver. CFDs are also available on a wide range of traditional financial markets, plus new markets like cryptocurrencies.