CFD Trading Strategies

CFDs, or contracts for difference, are derivative off-exchange instruments which allow traders to speculate on longer term price movements. Traded directly with the broker rather than the market, CFDs are contracts to buy or sell an underlying instrument at some future point, at a price stipulated today. Like spread betting, CFDs allow traders to adopt highly leveraged positions, and can provide traders with an alternative instrument on which to base their market and index projects. There are numerous trading strategies applicable to trading CFDs.

The importance of CFD trading strategies is hard to overstate, and without a coherent and defined plan of action it is extremely difficult to get to a stage where your CFDs consistently deliver a profit. Trading anything without a strategy is like playing golf blindfolded - while you might hit the ball once or twice, it's far more feasible to open your eyes and take account of the wider picture with a strategic approach to your CFD trading.

Choosing which CFD trading strategies to employ for best effect is something of a balancing act, and requires you to factor in a number of considerations when making that decision, including your appetite for risk, your trading objectives, the impact of leverage on your positions and your available capital. Nevertheless, finding a trading strategy that works for you is the first step towards more consistent CFD trading, and could set you on your way to building a long-term, profitable trading career.