CFD Trading Strategies for Beginners


Written By: Ehsan Jahandarpour

CFD trading Strategies for beginners, or Contracts for Difference trading tips, offer the potential for significant profits, but it also carries a range of risks that traders should be aware of. If you are new to CFD trading, it’s important to start with a solid foundation of knowledge and to develop a clear trading plan. Here are 10 practical tips that can help beginners to get started in CFD trading:

Top CFD trading strategies for beginners

There is more than one golden CFD trading strategy for beginners that new CFD traders should learn, including:

  1. Long-term investing: This involves buying and holding CFDs for a long period of time, allowing investors to benefit from price appreciation over time.
  2. Swing trading: This involves trading CFDs over a short period of time, taking advantage of price swings in the market.
  3. Momentum trading: This involves taking advantage of momentum in the market, buying when prices are rising and selling when they are falling.
  4. Day trading: This involves making multiple trades over the course of a day, taking advantage of short-term price movements.
  5. Arbitrage trading: This involves taking advantage of price discrepancies between different markets to make a profit.
  6. Scalping: This involves taking advantage of small price movements in the market, making multiple trades over the course of a day.

Here is a table of best beginner CFD Strategies that you can learn about.

StrategyRisk LevelTimeframeMarkets
ScalpingHigh1-5 minForex, Indices, Commodities
Momentum TradingMedium10-30 minForex, Indices, Commodities
Day TradingLow30 min – 4 hrForex, Indices, Commodities
Swing TradingLow4-24 hrForex, Indices, Commodities
Position TradingLow24+ hrForex, Indices, Commodities
HedgingLow24+ hrForex, Indices, Commodities
Price Action TradingMedium1-4 hrForex, Indices, Commodities
Breakout TradingHigh1-4 hrForex, Indices, Commodities
Range TradingMedium1-4 hrForex, Indices, Commodities
Trend FollowingLow1-4 hrForex, Indices, Commodities

Choose reputable CFD Trading Brokers

Decide on your trading objectives is the foundation of CFD Trading Strategies for beginners. Find a broker that matches your goals such as the level of risk you are comfortable with, the amount of capital you have available, and the types of assets you want to trade. This will help you to develop a clear trading plan and to identify the strategies and techniques that are most suitable for you.

To choose a reputable CFD Trading broker, check for regulation and licensing by a reputable financial authority, and review their financial track record and reputation. You can also compare different brokers using our comparison pages or by looking at reviews and ratings from other traders.

Use stop-loss orders in your cfd trading strategy

Stop-loss orders are a useful risk management tool that allow traders to specify the level of loss at which a position will be closed automatically. By setting a stop-loss order, traders can limit their potential losses and protect their capital.

Most brokers offer stop-loss orders as a risk management tool. To use stop-loss orders, specify the level of loss at which you want to close a position. For example, you might set a stop-loss order at 10% of your capital to limit your potential losses.

Manage your leverage

Leverage allows traders to increase their exposure to the market without having to put up the full value of the trade, but it also amplifies potential losses. It’s important to use leverage wisely and to manage your leverage in a way that is consistent with your trading goals and risk tolerance.

To manage your leverage effectively, consider your trading goals and risk tolerance, and choose a level of leverage that is appropriate for your level of experience and knowledge. You can use a leverage calculator to help you to determine the appropriate level of leverage for your trades.

Diversify your portfolio

Diversifying your portfolio is a key risk management strategy that involves spreading your risk across a range of different instruments and markets That’s one difference of CFD Vs Stocks trading. This can help to reduce the impact of any individual trade and to minimize the overall risk to your capital.

To diversify your portfolio, consider trading a range of different instruments and markets. For example, you might trade a combination of currencies, commodities, and stocks to spread your risk across different asset classes.

How can Traders Stay informed?

To stay informed about market news and economic developments, you can use technical analysis tools, economic calendars, market analysis, and news feeds. Some examples include the Economic Calendar from Forex Factory and the Market News section of the MetaTrader platform.

Use CFD risk management tools

Many brokers offer tools such as margin calculators and risk management software to help traders monitor and manage their risk. These tools can be useful for calculating the required margin for a trade, setting stop-loss orders, and tracking your performance.

Many brokers offer risk management tools such as margin calculators and risk management software. These tools can help you to calculate the required margin for a trade, set stop-loss orders, and track your performance. Some examples include the Margin Calculator from Plus500 and the Risk Management section of the MetaTrader platform.

Keep a trading journal

Documenting your trades in a trading journal can help you to identify patterns and areas for improvement in your trading strategy. A trading journal can also be a useful tool for tracking your progress and measuring your success.

To keep a trading journal, you can use a spreadsheet or a dedicated trading journal software. A trading journal can help you to document your trades, track your progress, and identify patterns and areas for improvement in your trading strategy. Some examples include the Trade Journal from Tradervue and the Trading Journal Spreadsheet from TradeBench.

Practice trades with a demo account

Many brokers offer demo accounts that allow traders to practice their skills and test out different strategies without risking real money. A demo account can be a useful tool for beginners to get a feel for the market and to learn how to trade without the pressure of real money.

Practice with a demo account. Most brokers offer demo accounts that allow traders to practice their skills and test out different strategies without risking real money. A demo account can be a useful tool for beginners to get a feel for the market and to learn how to trade without the pressure of real money.

Educate yourself by following experienced trader

Building a strong foundation of knowledge is essential for successful CFD trading. Take the time to learn about the mechanics of CFD trading, the risks and benefits, and the factors that can impact the value of the underlying asset by following an experience trader strategy. There are many resources available, including online courses, books, and articles, that can help you to build your knowledge and understanding.

There are many resources available for learning about CFD trading, including online courses, books, and articles. Some examples include the Investopedia CFD Trading course and the CFD Trading Guide from Admiral Markets.

Staying informed about market news and economic developments is essential CFD trading tips for successful CFD trading. Keep track of news events that could impact the value of the underlying asset, and use tools such as economic calendars and market analysis to help you stay on top of the latest developments.

Do trading strategies work?

It’s important to select a regulated and reputable broker for CFD trading. Look for brokers that are licensed and regulated by a reputable financial authority, and check their financial track record and reputation. Consider factors such as the types of assets they offer, the fees and commissions they charge, and the tools and resources they provide to traders.

To set clear trading goals, consider factors such as your risk tolerance, your capital, and the types of assets you want to trade. You can use tools such as a trading plan template or a risk calculator to help you to define your goals and to develop a clear trading plan.

What are some strategies for successful trading?

There are many cfd trading strategies that traders can use to increase their chances of success in CFD trading. Some strategies include:

  • Developing a clear trading plan: Define your trading goals, such as the level of risk you are comfortable with and the types of assets you want to trade. Use a trading plan template or a risk calculator to help you to develop a clear trading plan.
  • Using risk management tools: Use tools such as stop-loss orders, margin calculators, and risk management software to help you to manage your risk effectively.
  • Diversifying your portfolio: Spread your risk across a range of different instruments and markets to reduce the impact of any individual trade and to minimize the overall risk to your capital.
  • Staying informed: Keep track of market news and economic developments that could impact the value of the underlying asset. Use tools such as economic calendars and market analysis to stay informed.
  • Keeping a trading journal: Document your trades in a trading journal to identify patterns and areas for improvement in your trading strategy.
  • Practicing with a demo account: Use a demo account to practice your skills and test out different strategies without risking real money.

What are the benefits and drawbacks of using leverage in CFD trading?

Leverage allows traders to increase their exposure to the market without having to put up the full value of the trade. This can magnify potential profits, but it also amplifies potential losses. Some benefits and drawbacks of using leverage in CFD brokers include:

  • Benefits: Leverage allows traders to potentially make larger profits with a smaller capital investment. It can also allow traders to enter positions that they might not otherwise be able to afford.
  • Drawbacks: Leverage also carries the risk of increased losses, as the potential losses are magnified along with the potential profits. It’s important to manage leverage wisely and to trade within your risk tolerance.

How do I set stop-loss orders and take profit orders?

Remember, most accounts lose money. Stop-loss orders are used to specify the level of loss at which a position will be closed automatically. Take profit orders are used to specify the level of profit at which a position will be closed automatically. To set stop-loss orders and take profit orders:

  1. Determine the levels at which you want to close your position. For example, you might set a stop-loss order at 10% of your capital to limit your potential losses, and a take profit order at 20% of your capital to lock in profits.
  2. Use the trading platform or software provided by your broker to enter the order. Most brokers offer a range of order types, including stop-loss orders and take profit orders.
  3. Specify the size of the order and the price at which you want the order to be triggered. For example, you might enter a stop-loss order for 10% of your capital at a price 10% below your entry price.
  4. Confirm the order and wait for the price to reach the trigger level. When the price reaches the trigger level, the stop-loss or take profit order will be executed automatically, closing your position.

How do I stay updated about Forex market?

Staying informed about market news and economic developments is essential for successful forex and CFD trading. To stay updated you can:

  1. Use tools such as economic calendars and market analysis to stay up to date on news events and economic indicators that could impact the value of the underlying asset. Some examples include the Economic Calendar from Forex Factory and the Market News section of the MetaTrader platform.
  2. Follow reputable news sources and industry blogs to stay informed about market developments and trends.
  3. Consider using alerts or notifications to stay notified of important news events and economic releases.

What should I include in a trading journal?

A trading journal is a record of a trader’s trades and performance, used to track progress and identify patterns and areas for improvement. To keep a trading journal:

  1. Choose a method for documenting your trades. Some options include a spreadsheet or dedicated trading journal software.
  2. Record information about each trade, such as the instrument, the entry and exit prices, the size of the trade, and the reason for the trade.
  3. Include details about your performance, such as your profits and losses
  4. Use the trading journal to identify patterns and areas for improvement in your trading financial products and overall strategy. For example, you might look for trends in your profits and losses, or in your success rate with different instruments or market conditions.
  5. Consider including additional information, such as your emotions and mindset during the trade, any news or economic events that impacted the trade, and your overall level of confidence in the trade.