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 2022. Use our CFD trading for beginners tutorial to get started.

Best CFD Brokers

Filter Brokers
Found 68 Brokers
Leading forex and CFD broker since 2006, regulated in Ireland, Australia, Canada, Japan, Abu Dhabi, and South Africa. AvaTrade offers multiple trading platforms, including MT4/5, Web Trader, Mobile App, Vanilla options and Social Trading. +1250 Financial Instruments, Educational content and multilanguage customer support active 24/7. 20% Welcome bonus available on allowed countries.
FTSE Spread
0.5 pt
GBPUSD Spread
1.0 var
Oil Spread
0.02
Stocks Spread
0.13 Abv Market
FCA Regulated
No
MT4 Integration
Yes
Trade on a range of CFDs with competitive spreads and leverage
FTSE Spread
Variable
GBPUSD Spread
1.0 pip average
Oil Spread
Variable
Stocks Spread
NA
FCA Regulated
No
MT4 Integration
Yes
XTB is one of the largest stock exchange-listed FX & CFD brokers in the world, offering access to over 2000 instruments on their trading platforms.
FTSE Spread
0.08%
GBPUSD Spread
0.1 pips
Oil Spread
0.03
Stocks Spread
0.2% Var
FCA Regulated
Yes
MT4 Integration
No
Reliable and affordable trading since 2009. Join over 900,000 others trading on 400+ CFD products over assets like forex, gold, indices, cryptocurrency and shares from 0.0 spreads through TradingView, MT4 or MT5. Vantage is ASIC regulated and client funds are segregated. Open an account in under 5 minutes.
FTSE Spread
1 pt
GBPUSD Spread
0.0 via ECN
Oil Spread
2.8 pips (Var)
Stocks Spread
FCA Regulated
Yes
MT4 Integration
Yes
Trade CFDs on popular indices, shares, forex, crypto & commodities. Award winning platform, zero commission, free education and low spreads.
FTSE Spread
1.2
GBPUSD Spread
1.0 but 0.0 on Raw Account
Oil Spread
1.0
Stocks Spread
1.0
FCA Regulated
No
MT4 Integration
Yes
XM.com Offer a range of Account types and a low minimum deposit to appeal to all levels of trader. With 1000+ markets and low spreads they offer a great service.
FTSE Spread
1.5 pts (var)
GBPUSD Spread
2.1 (var)
Oil Spread
0.05 (var)
Stocks Spread
0.1% Var
FCA Regulated
No
MT4 Integration
Yes
Trade Forex on 0.0 pip spreads with the world's leading True Raw forex broker - IC Markets.
FTSE Spread
1 pt
GBPUSD Spread
0.5 pips
Oil Spread
1 pt
Stocks Spread
FCA Regulated
No
MT4 Integration
Yes
Axi is a global online FX and CFD trading company, trusted by 60,000+ ambitious customers in 100+ countries around the world.
FTSE Spread
1 pt
GBPUSD Spread
1.1 pips
Oil Spread
3 pips
Stocks Spread
FCA Regulated
Yes
MT4 Integration
Yes
Trade CFDs in a range of financial markets.
FTSE Spread
2
GBPUSD Spread
1.5
Oil Spread
0.13
Stocks Spread
Variable
FCA Regulated
Yes
MT4 Integration
No
Skilling are an exciting new brand, regulated in Europe and beyond, with a bespoke browser based platform, allowing seamless low cost trading across devices.
FTSE Spread
2 pts
GBPUSD Spread
0.5 pips
Oil Spread
6 pips
Stocks Spread
0.1% Each Side
FCA Regulated
No
MT4 Integration
Yes
Capital.com offer CFDs and Forex CFDs on a huge range of assets, with competitive spreads and zero commission on unique platforms, including the fully functional mobile app.
FTSE Spread
1.3 pt
GBPUSD Spread
1.3 pips
Oil Spread
0.06 pips
Stocks Spread
0.1% Var
FCA Regulated
Yes
MT4 Integration
Yes
Trade CFDs with up to 1:2000 leverage.
FTSE Spread
N/A
GBPUSD Spread
2
Oil Spread
5.2
Stocks Spread
From 0.1
FCA Regulated
No
MT4 Integration
Yes
FXChoice offers leveraged CFD products on a breadth of financial markets.
FTSE Spread
1.25
GBPUSD Spread
98 - 107
Oil Spread
30 - 49
Stocks Spread
Variable
FCA Regulated
No
MT4 Integration
Yes
Fusion Markets are delivering low cost forex and CFD trading via low spreads and trading costs. Their message is - Stop paying too much to trade
FTSE Spread
1.56 pts (Ave)
GBPUSD Spread
0.64 (Ave)
Oil Spread
3.1 pips (Ave)
Stocks Spread
FCA Regulated
No
MT4 Integration
Yes
easyMarkets.com - Simply Honest. Trade CFDs on Forex, Commodities, Indices, Shares & Cryptos With a Top Rated Forex Broker
FTSE Spread
GBPUSD Spread
0.9 (MT4)
Oil Spread
3 pips
Stocks Spread
0.1% Var
FCA Regulated
No
MT4 Integration
Yes
Trade CFDs on oil, currencies, indices, and stocks
FTSE Spread
-
GBPUSD Spread
From 0.1
Oil Spread
From 0.0
Stocks Spread
From 0.0
FCA Regulated
No
MT4 Integration
Yes
Invest in the markets with online CFDs.
FTSE Spread
0.77
GBPUSD Spread
1.3
Oil Spread
0.09
Stocks Spread
Variable
FCA Regulated
No
MT4 Integration
Yes
Diversify trading portfolios with contracts for difference available on multiple financial markets.
FTSE Spread
From 0.4
GBPUSD Spread
From 0.6
Oil Spread
From 3.0
Stocks Spread
Variable
FCA Regulated
Yes
MT4 Integration
Yes
Finq.com offers highly leveraged CFD products
FTSE Spread
2.0 pts
GBPUSD Spread
From 1.0 pip
Oil Spread
5.0 pips
Stocks Spread
<0.25%
FCA Regulated
No
MT4 Integration
Yes
CFDs are available across multiple financial markets.
FTSE Spread
Not offered
GBPUSD Spread
0.9 pips
Oil Spread
4-15 pips
Stocks Spread
Variable
FCA Regulated
Yes
MT4 Integration
No
FXTM is a leading forex and CFD broker. Offering a huge range of markets and 6 account types, they cater to all levels of trader.
FTSE Spread
1.3 pts
GBPUSD Spread
0.3 (var)
Oil Spread
9 pts (var)
Stocks Spread
0.1% Var
FCA Regulated
No
MT4 Integration
Yes
Trade CFDs on forex, indices, shares, precious metals, and energies.
FTSE Spread
1 - 2.3
GBPUSD Spread
0.0 - 1.5
Oil Spread
Variable
Stocks Spread
Variable
FCA Regulated
No
MT4 Integration
Yes
CFDs are available on multiple markets, including FX, indices, shares, commodities & cryptocurrency
FTSE Spread
0.7
GBPUSD Spread
0.4
Oil Spread
0.03
Stocks Spread
From 0.4
FCA Regulated
Yes
MT4 Integration
Yes
Markets.com offer CFDs across a huge range of assets from shares and indices to commodities and cryptocurrencies.
FTSE Spread
2 pips
GBPUSD Spread
1.3 pips (var)
Oil Spread
0.05
Stocks Spread
4 pips
FCA Regulated
Yes
MT4 Integration
Yes
IG offer spread betting, CFD and Forex trading across a range of markets. They are FCA regulated, boast a great trading app and have a 40 year track record of excellence.
FTSE Spread
1 pt
GBPUSD Spread
0.9 pips
Oil Spread
3 pips
Stocks Spread
0.1% Var
FCA Regulated
Yes
MT4 Integration
Yes
IronFX offers online trading in forex, stocks, futures and commodities
FTSE Spread
GBPUSD Spread
Oil Spread
Stocks Spread
FCA Regulated
No
MT4 Integration
Yes
Dukascopy is a Swiss-based forex, CFD, and binary options broker
FTSE Spread
166
GBPUSD Spread
N/A
Oil Spread
5.1
Stocks Spread
Start from 0.1
FCA Regulated
No
MT4 Integration
Yes
CFDs are supported for US stocks, equity indices, currency indices, energies and metals.
FTSE Spread
5
GBPUSD Spread
0.5
Oil Spread
3
Stocks Spread
Variable
FCA Regulated
Yes
MT4 Integration
Yes
CMC Markets is headquartered in London and listed on the LSE (FCA Regulated). It offers competitive spreads on a global range of assets via its Next Generation platform.
FTSE Spread
1 pt
GBPUSD Spread
0.9
Oil Spread
3.0
Stocks Spread
.10% Var
FCA Regulated
Yes
MT4 Integration
Yes
Go long and short on popular financial markets via the RaceOption platform
FTSE Spread
Floating
GBPUSD Spread
Floating
Oil Spread
Floating
Stocks Spread
Floating
FCA Regulated
No
MT4 Integration
No
TMGM offers a massive range of CFD instruments, encompassing more than 12,000 global equities, indices, currency pairs and commodities
FTSE Spread
4.0
GBPUSD Spread
1.4
Oil Spread
0.0
Stocks Spread
Variable
FCA Regulated
No
MT4 Integration
Yes
Anzo Capital clients can use MetaTrader 4 to trade CFDs on stocks, equity indices, crude oil and precious metals with competitive price levels.
FTSE Spread
1.1
GBPUSD Spread
0.3
Oil Spread
0.0
Stocks Spread
N/A
FCA Regulated
No
MT4 Integration
Yes
Rockfort Markets clients can trade a range of CFDs with high leverage rates, covering crypto, forex, commodity and international equity markets.
FTSE Spread
GBPUSD Spread
0.6
Oil Spread
Variable
Stocks Spread
Variable
FCA Regulated
No
MT4 Integration
Yes
Trade CFDs on stocks, indices and commodities.
FTSE Spread
Not Available
GBPUSD Spread
From 0.5 pips
Oil Spread
From 1.6 pips
Stocks Spread
Variable
FCA Regulated
No
MT4 Integration
Yes
AdroFX offers margin trading on CFDs across popular financial markets.
FTSE Spread
From 9.0
GBPUSD Spread
From 0.5
Oil Spread
N/A
Stocks Spread
From 5.0
FCA Regulated
No
MT4 Integration
Yes
Trade thousands of different assets with leveraged contracts for difference.
FTSE Spread
0.5
GBPUSD Spread
2.0
Oil Spread
4.4
Stocks Spread
Variable
FCA Regulated
No
MT4 Integration
Yes
Contracts for difference are offered on popular financial markets with tight spreads.
FTSE Spread
1.0
GBPUSD Spread
0.6
Oil Spread
3.5
Stocks Spread
Variable
FCA Regulated
Yes
MT4 Integration
Yes
Buy and sell across the financial markets with leveraged CFD products.
FTSE Spread
0.84
GBPUSD Spread
0.64
Oil Spread
1.6
Stocks Spread
Variable
FCA Regulated
No
MT4 Integration
Yes
CFDs are available on multiple financial markets including FX, indices & shares.
FTSE Spread
0.50
GBPUSD Spread
2.3
Oil Spread
0.05
Stocks Spread
Variable
FCA Regulated
Yes
MT4 Integration
Yes
CFDs are available on hundreds of markets including FX, indices, shares, & commodities.
FTSE Spread
1.7 - 2.95
GBPUSD Spread
0.8
Oil Spread
0.03 - 0.08
Stocks Spread
Variable
FCA Regulated
Yes
MT4 Integration
Yes
Buy and sell CFDs on the financial markets.
FTSE Spread
10.4
GBPUSD Spread
0.8
Oil Spread
5.2
Stocks Spread
Variable
FCA Regulated
No
MT4 Integration
Yes
Trade CFDs with tight spreads and leverage.
FTSE Spread
11.9 - 12.0
GBPUSD Spread
0.1 - 1.8
Oil Spread
0.12 - 0.19
Stocks Spread
Variable
FCA Regulated
No
MT4 Integration
Yes
Leveraged CFDs are available in several financial markets.
FTSE Spread
0.9
GBPUSD Spread
1.3
Oil Spread
0.02
Stocks Spread
N/A
FCA Regulated
Yes
MT4 Integration
Yes
Leveraged CFD products are available in multiple financial markets.
FTSE Spread
1.3
GBPUSD Spread
1.2
Oil Spread
0.03
Stocks Spread
Variable
FCA Regulated
No
MT4 Integration
Yes
Trade leveraged CFDs on a range of financial markets
FTSE Spread
From 0.1
GBPUSD Spread
From 0.1
Oil Spread
From 0.1
Stocks Spread
Variable
FCA Regulated
Yes
MT4 Integration
Yes
Trade on contracts for difference with up to 1:30 leverage.
FTSE Spread
0.2
GBPUSD Spread
1.1
Oil Spread
0.01
Stocks Spread
Variable
FCA Regulated
No
MT4 Integration
Yes
Trade CFDs with up to 1:30 leverage in multiple markets.
FTSE Spread
2
GBPUSD Spread
2
Oil Spread
0.04
Stocks Spread
Variable
FCA Regulated
Yes
MT4 Integration
Yes
Trade thousands of CFDs across a range of markets with up to 1:500 leverage.
FTSE Spread
0.31
GBPUSD Spread
0.49
Oil Spread
0.03
Stocks Spread
Variable
FCA Regulated
No
MT4 Integration
Yes
CFDs are available on thousands of markets, including forex, indices, shares, and commodities
FTSE Spread
0.8
GBPUSD Spread
1.3
Oil Spread
0.03
Stocks Spread
0.5
FCA Regulated
Yes
MT4 Integration
Yes
Zero Leverage Digital CFDs have a daily fee of approx. 1 pip and forex CFDs leverage up to 1:40
FTSE Spread
N/A
GBPUSD Spread
0.9
Oil Spread
N/A
Stocks Spread
Variable
FCA Regulated
No
MT4 Integration
No
Trade on a range of leveraged CFD products at HYCM.
FTSE Spread
Not offered
GBPUSD Spread
From 0.1 + $4 per round
Oil Spread
From 2 pips
Stocks Spread
Variable
FCA Regulated
Yes
MT4 Integration
Yes
Trade CFDs on currency pairs, indices, & commodities with tight spreads.
FTSE Spread
1.2
GBPUSD Spread
0.2
Oil Spread
4
Stocks Spread
N/A
FCA Regulated
Yes
MT4 Integration
Yes
Trade online CFDs with up to 1:30 leverage.
FTSE Spread
0.9
GBPUSD Spread
0.4
Oil Spread
50
Stocks Spread
0.02 USD
FCA Regulated
Yes
MT4 Integration
Yes
Trade CFDs with leverage across multiple markets.
FTSE Spread
N/A
GBPUSD Spread
0.5
Oil Spread
0.05
Stocks Spread
Variable
FCA Regulated
Yes
MT4 Integration
Yes
Trade CFD products in financial markets.
FTSE Spread
1
GBPUSD Spread
Floating from 0
Oil Spread
0.3
Stocks Spread
N/A
FCA Regulated
No
MT4 Integration
Yes
A suite of contracts for difference are available across popular markets with up to 1:500 leverage.
FTSE Spread
Floating from 0.2
GBPUSD Spread
Floating from 0.1
Oil Spread
Floating from 0.05
Stocks Spread
Variable
FCA Regulated
No
MT4 Integration
No
A regulated bank, Saxobank offer Equities and Forex trading on 40,000+ markets via the SaxoTrader Pro and SaxoTrader Go platforms
FTSE Spread
1.2 pts (Variable)
GBPUSD Spread
0.7 (var)
Oil Spread
0.03
Stocks Spread
0.10% (subject to min commission)
FCA Regulated
Yes
MT4 Integration
No
Fondex offers leveraged CFDs on a wide range of popular financial markets.
FTSE Spread
1.4
GBPUSD Spread
0.71
Oil Spread
6.71
Stocks Spread
Start from 0.01
FCA Regulated
No
MT4 Integration
No
You can take positions on a range of popular trading markets
FTSE Spread
Floating
GBPUSD Spread
Floating
Oil Spread
Floating
Stocks Spread
Floating
FCA Regulated
No
MT4 Integration
No
Trade CFDs across a wide range of assets with up to 1:500 leverage for professionals and 1:30 for retail clients
FTSE Spread
1.0 pts
GBPUSD Spread
0 pips (Via Razor)
Oil Spread
2.0 pips
Stocks Spread
From 0.0 pts for US shares
FCA Regulated
Yes
MT4 Integration
Yes
IB Boast a huge market share of global trading. With a minimum deposit of $10,000 however, they remain an option for larger traders only.
FTSE Spread
0.005% (£1 Min)
GBPUSD Spread
Commission (.20 pts x trade value)
Oil Spread
N/A
Stocks Spread
From 0.003 per share, variable
FCA Regulated
Yes
MT4 Integration
No
Trading 212 Offer a truly mobile trading experience. With tight spreads and a huge range of markets, they offer a dynamic and detailed trading environment. Recent customer care issues have severely damaged the reputation of the brand.
FTSE Spread
1.3 pt
GBPUSD Spread
2 pips
Oil Spread
5 pips
Stocks Spread
0.2% Var
FCA Regulated
Yes
MT4 Integration
No
Start trading on the financial markets with up to 1:500 leverage using competitive CFDs.
FTSE Spread
Not offered
GBPUSD Spread
From 0.1
Oil Spread
From 0.1
Stocks Spread
From 0.1
FCA Regulated
No
MT4 Integration
Yes
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
FTSE Spread
1 pt
GBPUSD Spread
2 pips
Oil Spread
5 pts
Stocks Spread
0.24% Var
FCA Regulated
Yes
MT4 Integration
No
Leveraged CFD trading is available on major financial markets.
FTSE Spread
From 0.0
GBPUSD Spread
From 0.0
Oil Spread
From 0.0
Stocks Spread
Variable
FCA Regulated
No
MT4 Integration
Yes
Invest in traditional and emerging markets in line with your broker's supported assets.
FTSE Spread
Broker dependent
GBPUSD Spread
Broker dependent
Oil Spread
Broker dependent
Stocks Spread
Broker dependent
FCA Regulated
No
MT4 Integration
Yes
Alpari offer forex, CFD and binary options trading across a big range of markets with low spreads and a range of account types that deliver for every level of trader from beginner to professional.
FTSE Spread
13
GBPUSD Spread
0.7 var
Oil Spread
4 pts
Stocks Spread
Variable
FCA Regulated
No
MT4 Integration
Yes
Trade CFDs on forex, indices, & commodities
FTSE Spread
0.7
GBPUSD Spread
0.2
Oil Spread
0.3
Stocks Spread
N/A
FCA Regulated
No
MT4 Integration
Yes

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.

CFD trading for dummies pdf

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.

CFD trading strategies for beginners pdf

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.

Strategies for CFD trading for beginners

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.

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.