Learn CFD Trading (21)

Updated: 08 March 2022
Top 5 forex Brokers:
Top 5 Stocks Brokers:

How Can I learn CFD trading?

CFD trading involves speculating on the price difference of various asset classes such as forex, equities, commodities, cryptocurrencies, bonds, ETFs and others. If you’d like to learn to trade CFDs, one of the ways to start is to choose the asset class and then go to the several online resources or CFD broker websites that offer free tools to learn.

One prominent site that provides both beginners and experienced traders with tons of free CFD learning tools is Asktraders.com.

What are the benefits of learning CFD trading?

There are a number of benefits from trading CFD’s, including:

  1. Accessing the underlying asset at a low cost with leverage
  2. Trade on the price movements of the asset without the need to purchase them outright
  3. Access to a massive range of global markets
  4. Understand how prices mirror the underlying asset class
  5. Hedge the underlying portfolio
  6. No expiry dates
  7. In countries like the UK, CFD trading is exempt from stamp duty

Can you make money by trading CFDs?

Yes, you can make money by learning to trade CFD’s. The primary difference between CFD’s and the other financial products concerns ownership of the underlying asset. With CFD’s, you trade the underlying asset with margin as opposed to purchasing it outright.

However, to become a successful trader, it takes a lot of time and effort, which is why only a small percentage of traders are profitable. One approach to making money in CFD’s is to recognise the risk inherent to the markets and capitalise on it.

Is CFD trading illegal?

CFD trading is legal in a majority of countries, albeit a few exceptions. In the US, CFD trading is illegal because of the restrictions imposed on OTC financial instruments by the Securities and Exchange Commission (SEC). Besides the US, CFD brokers generally do not offer services in countries like Syria, North Korea and Iran, since they are politically exposed and due to the risk of getting entangled with anti-money laundering agencies.

How difficult is it to learn to trade CFD’s?

It’s not very difficult to master CFD’s if you already have the experience of trading or investing in the other asset classes like equities and commodities, or if you’re familiar with derivatives. However, if you are a beginner, depending on the time frame you set to learn about these markets, you can choose between a financial markets trainer – a speedier option – and self-learning.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.