Skip to main content

How to Start CFD Trading As A Beginner

CFD Trading ukCFD stands for contract for difference. The advantages of CFD are so many. They make available a series of profitable opportunities for the online trader. However, the trader needs to have adequate knowledge to make trading decisions.

You can only make a profit from CFD trading if you have a good knowledge of fundamental and technical analysis as regards the particular asset you want to trade. The following are the characteristics of CFD trading:

  • It is a leveraged instrument
  • You can go long or short. It gives you opportunities to make profits either way
  • You can also choose among so many markets
  • CFD trading is never a get-rich-quick scheme
  • It is not the best source of investment for long term investors
  • You will have to learn a lot before you can make a profit from CFD trading UK

Best CFD Trading Brokers in the UK

Forex Brokers Min. Deposit Platforms Rating Secure Link
1 Plus500
Risk Information73% of retail CFD accounts lose money.
EUR 100/100$
Plus500 Webtrader
Mobile app
5/5 Visit Site
Regulators: FCA, CySec, ASIC
2 easyMarkets
Risk InformationYour capital is at risk
Web platform, MT4
Mobile app
4.9/5 Visit Site
Regulators: CySEC, ASIC, FSA-Seychelles
3 FXChoice
Risk InformationYour capital is at risk
MT4, MT5
Mobile Trading
4.8/5 Visit Site
Regulators: FCA, CySEC, DFSA, CIMA
4 BlackBull Markets
Risk InformationYour capital is at risk
MT4, MT5
4.7/5 Visit Site
Regulators: FSPR, FMA, FSA
5 fpmarkets
Risk InformationYour capital is at risk
MT4, MT5
WebTrader, Iress, VPS
4.6/5 Visit Site
Regulators: FCA, CFTC, ASIC

How does CFD Trading Work?

There is a similarity between CFD and spread betting. You will need to register on a CFD trading platform UK before you can get involved in CFD trading. In spread betting, the trader works out a trading position after carrying out adequate research and having a full understanding of the market. When you buy, it means that you hope the value of the market will rise. The reverse is the case when you sell. CFD trading is notional. It is a form of agreement between the broker and the trader. The broker agrees to pay the trader the different changes in price from opening to closing.

Best CFD Trading Brokers in the UK

As a CFD trader, you can sell a market if you think it will fall and make a profit. You can also buy the market if you think it will rise.

Leverage in CFD

As we mentioned earlier, CFD trading is a leveraged instrument. This means that the trader can open a position larger than what his capital can take. The extra money needed for the trade comes from the broker. The use of leverage enables the trader to make a huge profit using his very small capital. While leverage can help the trader to make a lot of money, it can also cause the trader to record a huge loss. So, we can call leverage a two-edged sword. This is why every trader should use leverage with utmost care. The leverage you can get depends on the broker you register with. The broker offers leverage in ratio. A leverage of 50:1 means that the broker will provide 50 units of the currency amount needed by the trader to hold a particular trading position.  The broker lends the money to the trader for the trade. Available assets in CFD trading.

There are so many assets you can benefit from in CFD trading. The assets are listed below:

  • spread betting
  • stock trading
  • commodities
  • futures
  • options
  • binaries

The best CFD trading platform that will provide you with all these assets is that you can start trading without further ado.

In the next section, we will give you helpful tips on how to start trading CFD so that you can always make the right trading decisions.

Proper research is essential

Before you start CFD trading, take some time to properly research the market and learn about how to trade. You can only successfully develop trading if you do proper research about the market. You will need to make out time for studying how the market behaves and then use the knowledge to build a trading strategy. CFD trading is not gambling, neither is it a get-rich-quick scheme. You can only make a long-term profit if you know what you are doing. You cannot know what you are doing except you take time to properly study the market. Gambling will cause you to lose money fast, but trading based on knowledge can help you to make a profit regularly from CFD trading UK.