CFD Day Trading

As a type of agreement that allows traders to speculate on the price of an underlying asset without owning it, contracts for difference (CFDs) are an ideal option for day traders. The market for CFDs has flourished since these derivatives became available to UK investors in the 1990s, with rapid growth in recent years bringing the monthly average number of UK CFD traders to over 560,000 in 2020. This guide will give investors all they need to know about CFD day trading in the UK, from strategies to the best online CFD brokers.

Top UK CFD Brokers List

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    AvaTrade's 1250+ leveraged CFD products span a wide range of asset classes including stocks, indices, commodities, bonds, crypto, and ETFs. You can speculate on underlying assets in the broker’s feature-rich web and mobile platforms with market-leading research tools to help discover opportunities.

  2. XTB

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    XTB offers a huge selection of more than 2,100 CFDs spanning forex, indices, commodities, stocks, ETFs, and cryptos (location-dependant). Leverage up to 1:30 is available in the EU and UK, while global clients and pro traders can access up to 1:500. XTB stands out for its CFD trading resources and tutorials to assist traders in developing short-term trading strategies.

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    CMC lets you trade CFDs on 12,000+ assets across currencies, indices, commodities, shares, ETFs and treasuries. Spreads are relatively tight, there are no hidden fees and the industry-leading MetaTrader 4 platform is also supported for leveraged trading. Year after year, CMC shines as one of the best CFD brokers in the market.

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    Eightcap offers a wide range of trading options with 800+ CFDs across stocks, indices, bonds, commodities, and cryptocurrencies (depending on location), with leverage up to 1:30/1:500. It excels in its tools, notably the AI-enabled economic calendar covering 25+ countries with impact filters (high, medium, low). However, its commodities offering, particularly in softs like cotton and wheat, as well as the limited precious metal and energy assets, is its weakest area.

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    FXCC offers a narrow range of CFDs beyond forex with a limited selection of metals, energies, indices and cryptos. However, it stands out with its high leverage up to 1:500, which will serve experienced traders looking to maximize their buying power while speculating on rising and falling prices.

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    Trade CFDs on Spreadex's diverse list of instruments with leverage up to 1:30 and highly competitive spreads. While this broker's USP is spread betting, the excellent trading terms and range of markets makes it an equally good choice for CFD trading.

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    Pepperstone maintains its position as one of the fastest and most dependable CFD brokers during our latest round of testing. With execution speeds averaging around 30ms and an outstanding fill rate of 99.90%, the broker ensures a seamless trading experience without requotes or dealing desk interference. It also provides ample trading opportunities across over 1,300 assets.

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    Over 8,000 CFDs are offered on a vast array of instruments, encompassing stocks, indices, forex, and commodities. Moreover, the TWS platform lends itself to seasoned traders, offering a comprehensive selection of over 100 order types and algorithms, alongside premium market data sourced from reputable sources such as Reuters and Dow Jones.

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    You gain access to over 2,250 CFDs, available for trading 24/5 across popular markets such as forex, commodities, indices, stocks, and bonds. Utilizing deep liquidity and advanced bridge technology, IC Markets ensures optimal conditions for scalpers, hedgers, and algo traders alike.

  10. XM

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    Traders can speculate on leveraged CFDs with zero commissions, spanning popular markets including currencies, equities and commodities. Additionally, the MetaTrader platforms collectively offer dozens of advanced technical indicators built for short-term strategies.

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    Trade 5,000+ CFDs from a single account with no hidden fees and free live market data. The suite of markets is impressive vs alternatives, including access to shares, indices, commodities and bonds.

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    DNA Markets offers a small suite of 250 CFDs covering stocks, indices, forex, commodities and cryptos, providing opportunities to speculate on rising and falling prices. There are no restrictions on strategies with leverage up to 1:30 (Australia) or 1:500 (rest of world).

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    With the ability to take both long and short positions on 5,500+ CFDs across forex, stocks, indices, commodities, and cryptocurrencies, FOREX.com excels. Its exclusive Web Trader platform offers an excellent trading experience, equipped with over 80 technical indicators and average execution speeds of just 20 milliseconds, ensuring an optimal environment for serious traders.

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    You can trade CFDs on over 3,000 assets and access rich market data through the integrated TradingView charts. There are also comprehensive free learning tools available for beginners via the eToro Academy, including dedicated CFD trading courses and guides.

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    RoboForex offers a growing suite of over 12,000 CFDs, encompassing forex, stocks, indices, commodities, futures and ETFs. With an initial deposit of $10 and micro lot trading through to very high leverage up to 1:2000, RoboForex caters to a broad range of derivative traders. On the downside, analysis reveals execution speeds of 1-3 seconds, noticeably slower than IC Markets at 0.35 seconds, and suboptimal for fast-paced strategies like scalping.

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    You can trade CFDs across a range of diverse markets with flexible account types and leverage up to 1:1000. With access to both MT4 and MT5, traders can execute multiple short-term CFD trading strategies using the dozens of pre-integrated technical indicators and graphical objects.

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    LQDFX offers a modest collection of CFDs covering currencies, metals, stocks, indices, commodities and cryptos. The 50+ technical indicators and drawing tools pre-included in MT4 will facilitate both short-term and long-term strategies.

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    Trade leveraged CFDs on over 1000 assets with low-cost spreads. You can also take advantage of the broker's integrated signals to help you determine when to enter and exit positions.

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    BlackBull Markets CFDs are offered on forex, stocks, indices, commodities and cryptos with tight spreads and high leverage. The ECN accounts offer fast execution and low slippage, and the broker provides traders with plenty of extra tools and features plus 24/7 customer support.

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    Traders can speculate on 1000+ financial markets with high leverage up to 1:500. You can bet on rising and falling prices in currencies, commodities, indices, shares, and more without owning the underlying asset. With the comprehensive choice of CFD trading platforms, users can also switch between desktop, web and mobile for a seamless trading experience.

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    FxPro offers thousands of CFDs on forex, commodities, indices, shares and futures. The broker's analysis and charting capabilities continue to stand as some of the best in the industry, with Trading Central integration, advanced order types and access to custom indicators.

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    Plus500 presents commission-free CFDs encompassing a vast array of markets, spanning currencies, stocks, indices, and commodities. You can engage in long or short positions on popular assets, benefiting from adaptable leverage without encountering any concealed fees.

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    IG offers a huge selection of 17,000+ CFDs, providing more trading opportunities than most CFD brokers. Traders can go long or short on popular markets like stocks, currencies, commodities and cryptos, while custom price alerts and the IG Academy continue to enhance the trading experience.

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    You can go long or short on a range of CFDs covering forex, commodities, shares, indices and cryptos. High leverage up to 1:500 is available for experienced traders in some locations, whilst beginners will appreciate access to micro-lots. There are no restrictions on short-term trading strategies using CFDs.

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    You can trade 275+ CFD instruments covering equities, currencies, commodities, indices and cryptocurrencies. The broker offers flexible trading software and account options, plus access to the unique dealCancellation risk management tool, which is ideal for beginners.

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    Access highly leveraged CFDs across forex, commodities, indices, stocks and bonds with 24/5 customer support. Build a diverse portfolio with hundreds of CFD assets.

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    CFDs are available on forex, stocks, indices, metals, oil and cryptos, with support on MT4. Execution speeds are also decent, averaging 0.5 seconds, though there is also a VPS service facilitating 24/7 connectivity for algo strategies.

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    CFDs are available on forex, indices, commodities and cryptos, although the range of 100+ instruments is limited compared to alternatives such as Quotex with 400+. Leverage is available up to 1:500 but the $250 minimum deposit is noticeably higher than competitors.

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    Markets.com offers a strong variety of CFD products, not only covering popular asset classes but also more interesting markets such as IPOs and Bonds. The low fees and educational resources will appeal to beginners, whilst seasoned CFD traders will appreciate the feature-rich charting platforms.

  30. Axi

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    Axi offers 220+ products covering forex, shares, commodities, indices and cryptos. Spreads on EUR/USD come in at around 0.2 pips in the Pro account and 1.1 pips in the Standard account. These are competitive and aligned with equivalent accounts at leading low-cost brokers like Pepperstone.

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    The broker offers a small range of 100+ CFD instruments spanning key markets, with high leverage up to 1:500. Pricing is reasonable, with round turn commissions coming in at $6 alongside tight spreads. Multiple short-term strategies are also permitted, including hedging and scalping.

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    VT Markets offers over 1000+ CFDs spanning currencies, stocks, indices, ETFs and commodities. The MetaTrader charting platforms provide dozens of technical tools alongside integrated market analysis resources and zero restrictions on short-term trading strategies.

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    My tests uncovered around 100 CFD products covering forex, indices, commodities and cryptos. Leverage is available up to 1:400 and it’s good to see that scalping, hedging and EA strategies are permitted.

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    PrimeXBT offers CFDs across four asset classes with very high leverage up to 1:1000. Beginners can also take advantage of the broker’s useful technical analysis guides and CFD education, plus 24/7 in-platform support via live chat.

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    Traders can access CFDs across forex, indices, commodities and stocks. There are no restrictions on short-term strategies, which is good news for scalpers and algo traders. There’s also an excellent range of free tools on offer, including a custom price ticker.

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    FXTrading offers CFDs on a wide range of assets, including forex, stocks, commodities, indices and cryptocurrencies. Commodities include a selection of softs as well as metals and energies, and the eight indices offered include the US30, US500 and UK100. Flexible leverage is available with excellent risk management tools.

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    ThinkMarkets continues to offer an excellent range of around 3500 CFD instruments covering forex, indices, stocks and commodities. Leverage is available up to 1:30 in the EU and UK, while global clients can access up to 1:500.

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    M4Markets offers CFD trading across forex, stocks, indices, commodities and cryptocurrencies. Traders can access powerful charting platforms with multiple order types and built-in indicators. There’s also a good selection of data-driven analysis tools supplied by reputable provider, Acuity.

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    SuperForex offers CFDs on a good range of assets, though it only really shines when it comes to forex, thanks to its very diverse list. On the other hand, the significant leverage available on most assets increases profit potential, though traders will need to watch out for spreads, which compare poorly to some competitors.

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    Access over 2,000 CFDs across diverse markets including indices, commodities and bonds. There is also premium daily analysis and strategy resources for savvy traders.

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    Trade 400+ CFDs on forex, stocks, commodities, indices and cryptocurrencies with the choice of commission-free or raw-spread accounts with transparent fees. Speculate on rising and falling prices with no hidden charges.

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    IronFX’s asset list of 300+ instruments covers forex, stocks, commodities and index CFDs. Maximum leverage from 1:30 to 1:1000 is available depending on account location. Traders can access superb technical analysis features, including 30 pre-integrated indicators and 9 charting time frames.

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    Ingot Brokers offers CFD trading on 1000+ instruments including stocks, commodities and cryptocurrencies. The MT4 and MT5 platforms offer comprehensive features for active CFD traders, including multiple order types and pre-integrated technical tools.

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    You can trade a range of CFD instruments across forex, shares, indices and commodities. There’s an excellent selection of platforms for traders, including TradingView and MT4, plus additional tools for experienced algo traders including API solutions.

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    You can trade hundreds of CFDs on major asset classes including currencies, shares and futures. Spreads are not overly competitive starting at 0.9 pips, although the $50 minimum deposit and zero commissions will allow active traders to keep their costs down.

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    Dukascopy offers highly leveraged CFDs with rates up to 1:200. A wide selection of asset classes are available, including currencies, equities, commodities, ETFs and cryptos. Spreads are also tight starting from 0.1 pips and traders get 24/7 support.

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    Trade CFDs on forex, stocks, indices, commodities and cryptos with high leverage up to 1:500 on the no-commission ClassiQ account. The raw spread account options have low commissions from $4 round-turn and offer lower maximum of leverage of 1:200 or 1:400, which is still competitive.

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    Trade CFDs on forex, indices, metals, oil and cryptocurrencies with high leverage up to 1:500 and competitive spreads, with the choice between zero commission or raw spreads.

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    Videforex CFDs are available on forex, indices, cryptocurrencies and commodities with up to 1:500 leverage and tight spreads from near zero. CFDs incur a commission fee of 1%–2.5% and up to 5% for leveraged trades.

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    Rock Global offers low-price CFDs on forex, shares, indices and commodities. The broker charges zero-commission trading on commodities and indices, and zero-spread, commission-only trading on shares. Leverage varies by instrument with 1:200 available on indices and 1:10 on blue-chip stocks.

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    FXTM’s CFD offering spans 250+ forex, stocks, commodities and indices, plus crypto CFDs at the global entity. Leverage up to 1:30 is available from the CySEC-regulated branch, though highly seasoned traders can also access massive 1:2000 rates from the global entity.

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    You can trade a competitive range of CFDs encompassing crypto, indices, energies and metals, with very high leverage up to 1:1000. ECN pricing is available, with spreads from 0.0 pips and low commissions from $2.50. A Cent account is also available for those on a smaller budget.

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    CFDs are available on a breadth of underlying assets, including stocks, indices, commodities, forex and cryptos. High leverage up to 1:500 is available alongside a 0.01 minimum lot size and award-winning software. For the tightest spreads from 0 pips, opt for the Premium account.

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    Trade CFDs on forex, indices, stocks, commodities and cryptocurrencies with leverage up to 1:3000. Swap-free trading is available, and all account types trade with competitive spreads and are commission-free except the Go Pro account, which charges a $7 round-turn commission.

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    CFDs are available on popular asset classes with a competitive $1 minimum deposit. The MT5 integration will allow serious short-term traders to utilize the vast library of technical tools, bots and indicators, but the lack of any CFD trading education puts the broker behind many alternatives.

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    Focus Option offers CFD trading through an intuitive mobile app, with 300+ tradeable instruments spanning forex, cryptocurrencies, commodities, shares and indices. Leverage ranges from 1:20 to 1:50 and spreads are variable, starting from 1 pip, with no commission.

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    Trade CFDs on forex, stocks, metals, energies, indices, cryptos and dollar futures. Sage FX offers tight spreads and high leverage on all instruments from 1:100 to 1:500.

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    Access thousands of CFDs with competitive pricing and leverage up to 1:500. A range of asset classes are available, including currencies, shares, indices, metals and commodities. CFDs can be traded on the market-leading MetaTrader platforms.

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    PU Prime offers CFD trading on hundreds of shares, as well as indices, commodities, bonds and cryptocurrencies. The leverage available varies by asset, and spreads also vary greatly between instruments and account types with the tightest near zero and the widest in the hundreds of pips. Stock, index, commodity and bond CFDs are traded on the leading MT4 platform.

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    SimpleFX stands out with highly leveraged trading options up to 1:1000 covering popular asset classes, including stocks, indices, currencies and commodities. Additionally, the social community serves as an excellent resource for gathering CFD strategy tips and short-term trading ideas.

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    Errante customers can trade stocks, indices, commodities and cryptocurrencies with leveraged CFDs. The level of leverage available depends on regulatory oversight, with 1:30 the maximum allowed in the EU though this varies by asset.

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    CFDs are available on hundreds of markets including forex, indices, shares and commodities. Traders can go long or short with reliable trading tools, excellent market research and transparent pricing.

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    Swissquote offers spot, forward and synthetic contracts on a breadth of markets, including stocks, indices, bonds and commodities. The pricing model is transparent with no hidden fees. Clients can diversify portfolios and hedge risk with low margin requirements.

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    Trade CFDs on forex, stocks, metals, energies, cryptos and indices with high leverage up to 1:1000 on major currency pairs, 1:200 on metals, 1:100 on indices, 1:33 on stocks and energies, and 1:5 on cryptocurrencies. The range of 200+ instruments is not the biggest on the market, but the variety of asset classes provides flexible trading options for most traders.

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    FP Markets' CFD trading covers a range of markets, including 10,000+ equities, indices, commodities, cryptocurrencies and ETFs. Spreads are tight and traders get fast execution speeds.

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    Core Spreads offers CFD trading on 40 forex pairs plus 13 commodities, including metals and energies, and 13 global stock indices including the UK100 and US30. CFDs are traded through the MT4 platform with leverage up to 1:30 in line with UK regulations.

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    Anzo Capital clients can use MetaTrader 4 and MetaTrader 5 to trade CFDs on stocks, equity indices, crude oil and precious metals with competitive price levels.

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    HYCM traders can access CFDs on a range of stocks, indices, commodities and ETFs with floating spreads and maximum leverage varying by instrument. Clients also have a choice between two industry-leading platforms.

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    Global Prime offers CFD trading opportunities on 150+ global markets including forex, indices, commodities, cryptocurrencies and bonds. Spreads are tight with a raw ECN account available starting from zero.

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    Fortrade's list of leveraged CFDs covers a wide range of asset classes including forex, stocks, bonds, indices, commodities and cryptocurrencies. Traders can access leverage up to 1:30 and will trade with zero commission, fast execution and low latency on MetaTrader 4 or the bespoke platform.

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    Traders have the opportunity to engage in CFD trading across a broad spectrum of assets, including currency pairs, stocks, commodities, bullion (gold and silver), indices, and cryptocurrencies. Experienced traders can access high leverage up to 1:1000 in certain jurisdictions. However, a notable downside is the restriction of scalping strategies which may deter experienced traders.

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    FXOpen offers CFDs on multiple assets including forex, stocks, commodities, indices, cryptocurrencies and ETFs. Leverage and spreads vary by instrument, with spreads starting from zero and fast order execution.

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    Libertex's list of CFDs covers a decent range of tradeable underlying assets, but there isn't much depth with only around 250 in total. Leverage up to 1:30 for retail clients is available in accordance with CySEC regulations, and traders can choose between three excellent trading platforms. Best of all are the tight spreads available on all markets and the zero commissions on investments in stocks.

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    Trade CFDs on forex, stocks, indices, commodities, ETFs, bonds and cryptocurrencies with variable leverage up to 1:30. The broker provides great value to traders with six free trades per day on US, UK and European stocks, tight spreads on forex and low commissions on ETFs.

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    Trade CFDs on a broad range of asset classes including forex, energies, precious metals, company shares, indices and cryptos. The excellent trade execution and opportunity to trade with direct market access pricing sets this broker apart from rivals.

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    Trade CFDs on forex, stocks, commodities and indices with tight spreads and leverage limited to the FCA-sanctioned maximum of 1:30. Infinox traders benefit from lightning-fast execution speeds and a choice between STP and ECN pricing, making this a flexible option for beginner and serious traders.

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    Trade CFDs on 75+ instruments, including forex, energies, metals, and indices with variable leverage up to 1:500 on major pairs, 1:200 on minors and exotics and 1:100 on commodities and energies.

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    OspreyFX offers leveraged CFDs on forex, commodities, stocks, cryptos and indices. Deep liquidity is available from 50+ providers with a competitive ECN account that will suit active trading strategies, including scalping.

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    Trade a decent range of markets via CFDs, with commissions of $6 per lot. There is also a reasonable $10 minimum deposit and 24/7 customer support for new traders.

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    Trade all markets via CFDs, with retail leverage up to 1:30. With the RStocks Trader account, clients can access over 12,000 CFDs with algorithmic analysis tools and intuitive charts.

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    AdroFx offers a most selection of around 100 CFDs on stocks, cryptos, indices and commodities. Its appeal lies in the high leverage up to 1:500 which you can't find in heavily regulated jurisdictions and the commission-free pricing model which will serve beginners. You can speculate on both rising and falling prices from the same product with CFDs.

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    Trade flexible CFDs on forex, commodities, indices and cryptos with tight spreads, fast execution, micro-lot trading and leverage up to 1:500. There are also no restrictions on trading strategies.

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    EZ Invest offers leveraged CFDs on popular asset classes, including forex, stocks, indices and commodities. Execution speeds are decent but a large deposit is needed for the best pricing conditions.

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    Trade 8,900+ CFDs spanning forex, stocks, indices, commodities, options and bonds with powerful tools and signals.

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    Access a modest range of CFD instruments across key markets, including indices and commodities. Clients can trade directly from charts with high leverage up to 1:500 and customisable time intervals.

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    You can speculate on popular financial assets covering forex, commodities, indices, metals and bonds. You can get started with $0 minimum deposit, making the broker a good pick for beginners. There’s also over 130 technical indicators available collectively in the MT4 and OANDA Trade platforms.

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    Trade CFDs on 100+ instruments from popular asset classes. Leverage up to 1:200 is available on precious metals, while stocks, indices and energies can access 1:20 max leverage and 1:10 for commodities. On the negative side, the depth of assets is limited vs other CFD brokers.

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    With CFDs on 20+ Polish and 30+ US stocks, as well as energies and seven global stock indices covering US, UK, European, Australian and Japanese markets, Just2Trade offers a superb selection of global assets.

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    You can take positions on a range of popular trading markets including forex, stocks, energies and metals. Leverage is high at 1:500 and live spreads can be viewed in the web-accessible platform and app.

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    World Forex's leveraged CFDs are available on a modest suite of 100+ instruments, including stocks, commodities and forex. Very high leverage up to 1:1000 is available for account balances up to $1000, with lower levels available to accounts with higher balances.

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    Trade commission-free CFDs on 3000+ instruments from forex, stock and commodities markets with volumes starting from 0.1 lots, a low minimum deposit of $10 and tight floating spreads. The selection of CFDs beats most competitors.

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    Trade CFDs on forex, commodities, indices and crypto assets. With spreads from 0 pips and generous incentives and bonus offers setting Vault Markets apart from competitors, this Namibian broker will appeal to aspiring traders.

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    Trade CFDs on forex, stocks, indices, energies and metals with fast execution and variable leverage. Spreads are tight and commission-free trading is available on some assets.

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    Trade 200+ CFDs with leverage up to 1:1000 on a powerful proprietary platform. Asset classes include stocks, forex and crypto with ECN execution. You can bet on rising and falling prices with leveraged CFDs.

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    Trade CFDs on an array of assets with ultra-low spreads

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    Engage in leveraged CFD trading across a wide array of instruments, encompassing forex, stocks, commodities, and indices. Yet while the selection of asset classes is satisfactory, the charting software and floating spreads for short-term traders fall behind that of competitors.

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    Trade leveraged CFDs in a range of financial markets.

CFD Day Trading Basics

  • Traders use CFDs to bet on price movements of an asset
  • CFDs are a derivative, meaning traders do not take physical ownership of the underlying asset, for example gold
  • CFDs are legal in the UK, regulated by the FCA, and are widely available on popular trading platforms
  • Day traders typically speculate on short-term price fluctuations that happen within a single trading day

A CFD is an agreement between an investor and an issuer, which allows the investor to bet on whether the price of an underlying asset will rise or fall. Since CFDs allow traders to make leveraged bets on price movements of assets such as stocks, indexes and currencies without owning them, they are ideal for day traders looking to earn money on short-term trades without undertaking long-term exposure.

CFDs are available to UK investors through brokerages and trading platforms, including some of the country’s most widely used and trusted sites. One of the quickest and easiest ways to begin day trading CFDs is through a popular trading platform such as Deriv. Different platforms will give traders access to different markets, including stocks and shares, indices, commodities and forex.

CFDs operate on a margin basis, and most platforms and brokers will need a deposit of around 10 percent of the contract value when the trade is opened. Since CFD issuers often require a minimum deposit to be held in accounts, traders may need to top up their deposit if they make a loss on a trade.

Getting Started

To get started with CFD day trading, an investor must first decide on which asset they wish to speculate on and which direction they think the price will move.

If they think the FTSE is going to rise, for example, the trader can open a long position with an online broker. If they open a contract on FTSE shares worth £10,000 when the trade is opened, and the price has risen to £11,000 by the time the trade is closed, the broker will have to pay the investor the £1,000 difference minus any fees. If the trade goes against the investor, their losses will be deducted from their deposit.

Leverage

As outlined above, many day traders use CFDs to make leveraged trades, meaning they can use borrowed funds to gain exposure to much larger trading positions than would normally be available to them. UK regulations limit the amount of leverage available to individual investors to 1:30 for currency trades and around 1:5 for stocks and shares. It’s worth pointing out that UK traders can access larger leverage rates if they day trade CFDs with an offshore, unregulated provider, though this brings with it additional risk.

CFD Day Trading Leverage Explained

Credit: IG

So, leverage can greatly increase gains made in a good trade, but it will also magnify losses to the same extent. Traders must be able to cover the entire contract value plus costs if a trade goes against them, so caution is advised when trading on high leverage. With astute use of leverage, however, CFDs can net large profits on relatively small price movements over a short time frame, making them an ideal option for day trading.

Note that if a trader keeps a leveraged trade going overnight or over a weekend, they may be required to pay an overnight or rollover fee, usually about 2-3 percent above the overnight fee charged by a bank.

Taxes

If they profit, traders are usually responsible for reporting their gains for tax purposes. In the UK, individual investors’ profit from CFDs is normally classed as capital gains and taxed accordingly. One advantage of CFDs is that, since the investor never actually purchases the underlying asset being traded, they are exempt from stamp duty. See our guide to trading taxes for more information.

CFD Day Trading Strategies

Like most investing, CFD day trading can be unpredictable. But by planning carefully and sticking to a few basic principles, traders can ensure they make the most of their good runs and limit their losses when trades turn against them. Some of the most important steps toward building a winning CFD day trading strategy are listed below.

  • Choose the right trading broker and online investing platform
  • Carefully research the market, for example currency pairs with GBP
  • Develop an effective CFD day trading strategy
  • Practice paper trades on a demo account
  • Implement systems to limit risk
  • Keep a trading journal

Choose the Right Broker

A wide range of brokers and platforms offer day trading on CFDs, and there may be a great difference in service and charges among any two. For example, typically brokers make money from the spread on forex and commodities trades, but some may also charge a commission. Another major difference is the range of assets available, as this limits the options available to traders who wish to deal with a particular stock or currency pair.

Besides these factors, it is important to choose a platform which is easy to use and provides all the necessary features. Investors who favour fast-paced trades will prefer a responsive system with minimal lag. Those who plan to trade CFDs alongside other investments may wish to find a flexible platform which allows them to keep their investments in one place and smoothly move funds around when the need arises.

Research the Market

Before a day trader thinks about putting their money at risk, they should have a good knowledge of the asset they are trading. Different assets will have different volatility levels and other characteristics, and these must be considered. Beginners are usually advised to stick to lower volatility assets, such as the GBP/USD currency pair.

Researching the asset’s price history is a great starting point, but investors should also closely follow market news and be sure they are aware of factors that could influence the price positively and negatively.

Choose a Strategy

Once investors are familiar with their CFD day trading platform and the asset they wish to trade, they can begin to research and practice different strategies. Some traders use technical analysis to predict an asset’s top and bottom price limits and trade on the swing between these two levels.

Others prefer to try to follow the momentum of price movements with a high volume of very short trades in a fast-paced strategy known as scalping.

Whichever strategy suits your style best, it is usually a good idea to get plenty of practice on a virtual account or with low-stakes trades before you move on to larger amounts and higher leverage.

Paper Trading

One of the most useful actions a trader can take is to spend time making paper trades before they start with real money. Many platforms allow users to open demo accounts and make paper trades on real assets without risking their cash. This gives new traders a chance to test their mettle before taking the plunge with a real day trade. It also allows more experienced traders to safely learn the ins and outs of a new platform so they can quickly and confidently hit the right buttons when the time comes to make a real CFD day trade.

Implement Risk Strategies

Leveraged CFD day trading can lead to large losses in a single unlucky trade, so it is vital for traders to plan carefully to limit risk. Most CFD platforms will automatically provide negative balance protection, which prevents a user from losing more than they hold in their online account. Investors should ensure they are aware of their platform’s policy before trading, but they should also implement their own measures with every trade.

Best CFD day trading brokers

Credit: eToro

Many platforms allow users to set automated orders which will end a trade once the price reaches a predetermined level. Day traders should take full advantage of stop-loss orders to cut their losses when the price is moving unfavourably. For example, if a trader opens a short position on stocks of Company A at £100 with a stop-loss order set at £105, their position will automatically close when the price reaches £105. This is especially useful for leveraged trades in which even a small price movement in the wrong direction can lead to substantial losses.

Similarly, traders can set orders which will automatically close some or all of their position once they reach a certain level of profit. This counters the natural human tendency to get greedy when a trade is panning out well, ensuring that the CFD day trader will earn profit on the trade even if the price movement suddenly turns against them.

Keep a Journal

You may wish to simply forget about the CFD trades that don’t pay off, but noting them down alongside your successful trades in a journal can prove helpful for aspiring day traders. Your trading journal will not only allow you to analyse your past trades to see what worked (or didn’t), it will also serve as a record of your net profit or loss throughout the year so you are not stumped when the time comes to pay taxes.

Bottom Line on CFD Day Trading

CFDs are one of the most convenient ways to begin day trading in the UK, since they allow investors to make leveraged trades on a range of assets without having to own them. Since CFDs are FCA-regulated and available on reputable platforms with built-in risk-management systems, they are also a relatively secure way to trade. However, traders should always be wary of the risks involved in leveraged trades, since these multiply losses as well as profits.

FAQ

Trading contracts for difference is both legal and popular in the UK, with CFDs available from many platforms on a range of assets from stocks to forex. However, cryptocurrency CFDs are not typically available in the UK, since the FCA has banned all crypto derivatives. Instead, British investors will need to register with an offshore provider to speculate on cryptos using CFDs.

What Is The Best Way To Day Trade CFDs?

Each trader will have their own requirements when day trading CFDs, so it is important to shop around to find the best broker or platform for your financial goals. Some may prefer the platform with the lowest fees, while others will look for one that has the quickest and most responsive interface for making fast-paced trades. See our list of the best CFD day trading brokers to get started.

Do CFD Day Traders Make Money?

In the end, CFDs like all derivatives are risky, and a bad trade coupled with high leverage can quickly wipe out a trader’s investment capital. By the same token, it is possible to make outsized returns when a CFD trade goes your way. Whether or not a trader makes money in the long run is largely determined by their ability to manage risk.

Is CFD Day Trading Good For Beginners?

There are several options for beginners who wish to start day trading with CFDs. The first and best is for them to invest their time in a virtual trading account, which will let them trade CFDs to their heart’s content without putting any real money at risk. Once they have a good grasp of trading on the platform and how to manage risks, they can move on to trading with real money.

Is CFD Day Trading Risky?

All day trades carry risks, but the leverage usually employed in CFD trades has the potential to multiply those risks many times over. The key to successful trading is to manage risks by carefully planning your trade and setting realistic stop-loss orders. Traders should also ensure they trade on a platform that has negative balance protection in case a trade wipes them out, and take profits regularly when the market moves in their favour.