Can You Make Money With CFD Trading?

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CFD trading gives traders better exposure to more expensive assets to buy and sell. Find out how to make money with CFD trading.

CFDs are forms of futures contracts whereby traders leverage the prices of underlying markets for profits without owning the security. Unlike the traditional stock trading system that requires traders to settle payments in securities or commodities, CFD traders pay the price differences in cash. CFDs are mainly attractive to most traders because they allow you exposure to many assets that are often costlier to trade. To see the bigger picture of crypto trading use BitAlpha Ai.

CFD trading enables you to maximize the returns on even small investments due to the leverage. Traders can open positions with just a portion of their total trades’ value, called a margin. It also provides more flexibility, as you can choose to go short or long, based on the market projections. Trading CFDs also allows traders access to many assets or markets, making it a profitable investment worth considering. Here are vital tips on how to make money with CFD trading.


Set Stop-Loss Orders

CFD traders leverage the price movements of the underlying assets or markets to score profits. A trader will go short when they expect prices to increase and go short on trade if they predict a market decline. However, various factors, including government regulations and shifts in market conditions, can impact unexpected rapid situations, disrupting the entire market. Sometimes, even expert predictions fail to materialize. Thus, setting stop-loss orders is essential to reducing risk exposure and cutting your losses.

It allows you to enforce exit limits, preventing huge losses that could bleed out your portfolio.

Set Take-Profit Orders

CFDs are derivatives with very high volatility. That means even seemingly small unexpected developments or news could enormously impact market prices. Setting take-profit orders or limit orders enables you to lock in profits if the markets start to experience a sudden turmoil. Established CFD brokerage platforms such as the Bitcoin Era have dedicated web and smartphone apps with the necessary tools for traders to set stop-loss and take-profit orders. Please select a reasonable limit and stick to it for successful CFD trading.


Limit Leverage

CFD trading allows traders to use leverage or gain exposure to assets that are a bit expensive to buy and sell. However, thinking that the price will always move in your favor after opening a position is unrealistic. A small wrong direction move could force you to close out the trade position and forgo profits if the price rebounds and movements in the right direction in case the leverage is very high. Leverage levels can go as high as 400:1, but you should consider limiting your amounts to 30:1, especially for significant currency pairs.

Choose the Right Trade Position

Some CFD brokers do not allow traders to lower the leverage levels manually to avoid sudden changes in market conditions. Also, it instills a sense of discipline among traders. However, failing to reduce the leverage could also expose you to risks of losses. In that case, you should consider lowering the trade position. Nevertheless, it is essential to always know your outstanding risk exposure before moving.

Do Due Diligence

There is too much hype about how people are making a killing with CFDs. Such sentiments can easily tempt you into joining the action, expecting similar returns. However, no guarantee exists that you will consistently score big. Like any other investment, successful CFD trading requires a proper understanding of the market, including the potential benefits and risks. So, do a little more research to familiarize yourself with the CFD market conditions, trading strategies, and other essentials.


You can indeed make money with CFD trading. However, exercise the above precautions to mitigate risks and maximize the returns on your investments.