CFD Trading Tips

Even now that the hype surrounding Bitcoin and other cryptocurrencies has died down, they still remain extremely volatile, with anything up to 20% fluctuations interday. This makes them extremely popular for daytrading, where profits are made within a single trading session or even shorter time frames.

The more advanced brokers in the online sector offer cryptocurrency trading through CFDs and forex pairs, in which the cryptocurrency is usually the base currency, measured against – mostly – the US dollar as the pair’s countercurrency.

Contracts For Difference (CFD) trading allows the trader to profit from both falling and rising markets. He/she does not own the asset directly when trading forex, stocks, commodities or anything else, with the contract simply an agreement between two parties to exchange the difference between its opening and closing price. Traders go long if they believe an asset’s price will rise and go short if they think it will fall.

Moreover, traded as forex pairs, the market is open narly 24/7 – whenever a major global market is open.

Control Your Leverage

All CFD trading strategies must take into account that these are a leveraged product and be in control of this. You only need a small percentage of the total trade value to open a position, for example with a 10:1 leverage only 10% is required as trader’s equity. This means you can make large gains from a small initial capital, but it can also swing the other way if things don’t go to plan. It is essential to factor leverage into all CFD trading strategies.

Use Stop Losses Safely

A great way to stay in control of leverage and one of the most important CFD trading tips is to use stop losses wisely. If you do no use stop losses, there is a chance your investments could be completely wiped out. On the other hand, if they are too tight you will find it hard to make any gains. Allow enough of a gap for the markets to go up and down, but factor in set limits to any CFD strategies to avoid losing too much.

Create Clear Goals

All traders need goals to work towards but these need to be realistic. If you’re opening positions with a low starting capital you’re unlikely to become a millionaire in days. The best CFD trading strategies are built around an end goal, whether it is to make a set amount of money each day, week or month or to just not make a loss. Realistic goals provide you with a base point to work towards before building up. Create a goal by assessing your current finances, level of trading expertise and time you will be spending trading.


As with all types of trading, putting your eggs in one basket is not a good idea. If you only open CFDs with one currency pair on the forex market and it loses value, then you could quickly lose out. One of the best pieces of advice when making any trade is to never risk more than 2% of your trading capital in one go, ensuring you have to diversify.

Incorporate these CFD trading tips into your CFD trading strategies before you begin trading here at Sharp Trader.