Day trading with CFDs is a popular strategy. From pattern day trading in the US, to day traders in Europe and beyond, the leverage and costs of CFD trading, make it a viable option for active traders and intraday trades. This page provides an introductory guide, plus tips and strategy for using CFDs, and offers a list of the best brokers for CFD day trading in 2019.

Markets.com offer CFDs across a huge range of assets from shares and indices to commodities and cryptocurrencies.

Plus500 Offer CFD and forex trading via the popular Webtrader online trading platform. With tight spreads and no commission, they are a leading global brand.

Plus500 Offer CFD and forex trading via the popular Webtrader online trading platform. With tight spreads and no commission, they are a leading global brand.

Trade Forex on 0.0 pip spreads with the worlds leading True ECN forex broker – IC Markets.

Trade Forex on 0.0 pip spreads with the worlds leading True ECN forex broker – IC Markets.

BDSwiss offer 250+ Shares, Indices, Forex, Commodities and Cryptocurrencies markets via CFDs. With spreads from 1 pip and an award winning app, they offer a great package.

BDSwiss offer 250+ Shares, Indices, Forex, Commodities and Cryptocurrencies markets via CFDs. With spreads from 1 pip and an award winning app, they offer a great package.

Leading forex and CFD broker regulated in Ireland, Australia and South Africa. Avatrade are particularly strong in integration, including MT4

Leading forex and CFD broker regulated in Ireland, Australia and South Africa. Avatrade are particularly strong in integration, including MT4

Forex.com boast a global reputation. Regulated in the UK, US, Canada and Australia they offer a huge range of markets, not just forex, and offer very tight spreads and a cutting edge platform.

Trading 212 Offer a truly mobile trading experience. With tight spreads and a huge range of markets, they offer a dynamic and detailed trading environment.

Trading 212 Offer a truly mobile trading experience. With tight spreads and a huge range of markets, they offer a dynamic and detailed trading environment.

XTB are an FCA regulated brand offering CFD and Forex trades. They offer 3 levels of account, Including Professional.

XTB are an FCA regulated brand offering CFD and Forex trades. They offer 3 levels of account, Including Professional.

Vantage FX are a Raw ECN Forex broker, regulated by ASIC is Australia. Boasting MT4, MT5 and Webtrader platforms, a range of account types and a deposit bonus of up to 50%

Vantage FX are a Raw ECN Forex broker, regulated by ASIC is Australia. Boasting MT4, MT5 and Webtrader platforms, a range of account types and a deposit bonus of up to 50%

Global brand offering exceptional execution, low deposit requirements and advanced charting and trading platform features.

Global brand offering exceptional execution, low deposit requirements and advanced charting and trading platform features.

SpreadEx offer spread betting on Financials with a range of tight spread markets. Popular award winning, UK regulated broker.

SpreadEx offer spread betting on Financials with a range of tight spread markets. Popular award winning, UK regulated broker.

IG offer spread betting, CFD and Forex trading across a range of markets. They are FCA Regulated, boast a great trading app and have a 40 year track record of excellence.

IG offer spread betting, CFD and Forex trading across a range of markets. They are FCA Regulated, boast a great trading app and have a 40 year track record of excellence.

Multi-Award winning broker. Specialising in Forex but also offering stocks and tight spreads on CFDs and Spread betting across a huge range of markets.

Multi-Award winning broker. Specialising in Forex but also offering stocks and tight spreads on CFDs and Spread betting across a huge range of markets.

New Forex broker Videforex can accept US clients and accounts can be funded in a range of cryptocurrencies. Payouts reach 95% per trade.

New Forex broker Videforex can accept US clients and accounts can be funded in a range of cryptocurrencies. Payouts reach 95% per trade.

A regulated bank, Saxobank offer CFD, Stocks and Forex trading on 35,000+ markets via the SaxoTrader Pro and SaxoTrader Go platforms

A regulated bank, Saxobank offer CFD, Stocks and Forex trading on 35,000+ markets via the SaxoTrader Pro and SaxoTrader Go platforms

Ayondo offer trading across a huge range of markets and assets. They also offer negative balance protection and social trading.

Ayondo offer trading across a huge range of markets and assets. They also offer negative balance protection and social trading.

FXCM are an FCA regulated, London based broker. Companies under the FXCM umbrella are also regulated in Australia and Canada.

FXCM are an FCA regulated, London based broker. Companies under the FXCM umbrella are also regulated in Australia and Canada.

Trade nearly 200+ global stocks at 24Option via CFDs. Spreads are competitive and stop loss and take profit orders are available. Even trade new cannabis firms in Canada!

Trade nearly 200+ global stocks at 24Option via CFDs. Spreads are competitive and stop loss and take profit orders are available. Even trade new cannabis firms in Canada!

eToro pioneered the social trading concept, making CFD, Forex and Crypto investing accessible to everyone. FCA regulated.

eToro pioneered the social trading concept, making CFD, Forex and Crypto investing accessible to everyone. FCA regulated.

Invest.com provide portfolio management plus standard trading. Leverage and spreads improve with each account level – Bronze, Silver or Gold

A CFD is a contract between two parties. They agree to pay the difference between the opening price and closing price of a particular market or asset. It is therefore a way to speculate on price movement, without owning the actual asset.

The performance of the CFD reflects the underlying asset. Profit and loss are established when that underlying asset value shifts in relation to the position of the opening price.

When trading CFDs with a broker, you do not own the asset being traded. You are speculating on the price movement, up or down.

Lets use an example. Say you select a stock with an ask price of $25 and you open a CFD to the value of 100 shares.

If buying shares the traditional way, the cost would be $2,500. There might also be commission or trading costs.

However, a CFD broker will often require just a 5% margin. This will allow you to enter the same trade but with only $125. (Actual levels of leverage or margin will vary). This makes it an attractive hunting ground for the intraday trader. The risk and reward ratio is increased, making short term trades more viable.

When you enter your CFD, the position will show a loss equal to the size of the spread. This means if the spread from your broker is 5 cents, youll need the stock to appreciate by at least 5 cents to break even.

Using the above example: Lets say the price of the underlying stock continues to increase and reaches a bid price of $26.00

If you owned the stock, your holding is now worth $2600. A nice profit ignoring commission or trading costs the trader realised $100.

However, with the underlying stock at $26.00, the CFD would show the same $100 profit but it required way less to open, just $125. So in terms of percentage, the CFD returned much greater profits. Had the market moved the other way, losses relative to our investment would have been larger too both risk and reward are increased.

There are of course other benefits to owning an asset rather than speculating on the price. We also ignored commissions and spreads for clarity. But the above does illustrate the relative differences in the two methods of investing.

As you are day trading you probably wont hold any CFD positions overnight. Instead, youll likely place a high number of CFD trades in a single day. To maximise your returns youll want to concentrate on liquid volatile markets. CFD trading with oil, bitcoin, and forex are all popular options, for example.

You may have already gleaned a couple of advantages above from CFDs, but lets break them down and add a few more.

CFD leverage is much higher than traditional trading. You can get margin requirements as little as 2%. The rate usually depends on the underlying asset. Shares or volatile cryptocurrencies, for example, can reach up to 20%. Whilst low margin rates will allow you to take big positions with less capital, losses will also hit you harder.

The best CFD brokers will allow you to trade in all of the major markets. With so many markets that means CFD trading hours effectively run 24 hours a day. Youll just need to check your brokers trading hours first.

CFD trading systems incur minimal costs. You will find many brokers charge little or zero fees to enter and exit trades. Instead, they make their money when you have to pay the spread. The size of the spread will depend on the volatility of the underlying asset. Note it is usually a fixed spread.

Some markets enforce rules that prevent you shorting at certain times. They can demand greater margin requirements for shorting as opposed to being long. The CFD market, however, generally doesnt have such rules, as youre not actually owning the underlying asset. This means no borrowing or shorting costs.

Some markets require significant capital to start trading. This limits you to how many trades you can make, and in turn how much profit. An online CFD trader, however, can set up an account with as little as $1,000 to $5,000.

Whatever peaks your interest, youll probably find a CFD vehicle. You can start CFD FX trading, as well as utilising treasury, commodities, cryptocurrencies, and index CFDs.

Despite the numerous benefits, there remain a couple of downsides to CFDs you should be aware of.

The CFD industry is not thoroughly regulated. This means its increasingly important you select the right broker. You need to make sure they are credible and in a strong financial position. For more guidance, see ourbrokers page.

While margin increases profit potential, it also increases risk. It is very easy to lose sight of the total exposure you have when using margin. $2000 worth of open positions using 5% margins mean exposure to $40,000 worth of contracts. You are effectively borrowing $38k from your broker. If markets move against you, losses can exceed deposits. An awareness of the total exposure is very important.

One of the selling points of trading with CFDs is how straightforward it is to get going. Youll need to follow just five simple steps.

There are thousands of individual markets to choose from, including currencies, commodities, plus interest rates and bonds. Try and opt for a market you have a good understanding of. This will help you react to market developments. Most online platforms and apps have a search function that makes this process quick and hassle-free.

If you buy you go long. If you sell you go short. Bring up the trading ticket on your platform and you will be able to see the current price. The first price will be the bid (sell price). The second price will be the offer (buy price).

The price of your CFD is based on the price of the underlying instrument. If you have a reason to believe the market will increase, you should buy. If you believe it will decline you should sell.

You now need to select the size of CFDs you want to trade. With a CFD, you control the size of your investment. So although the price of the underlying asset will vary, you decide how much to invest. Brokers will however, have minimum margin requirements or more simply, a minimum amount that is required in order for the trade to be opened. This will vary asset by asset. It will always be made clear however, as will the total value (or your exposure) of the trade.

Volatile assets such as cryptocurrency normally have higher margin requirements. So a position with exposure to $2000 worth of Bitcoin, might need margin of $1000 for example. A well traded stock however, may only need 5% margin. So a $2000 position on Facebook, may only require $100 of account funds.

This will help you secure profits and limit any losses. Most CFD strategies for beginners and experienced traders will employ the use of stop losses and/or limit orders. They tie in with your risk management strategy. Once you have defined your risk tolerance you can place a stop loss to automatically close a trade once the market hits a pre-determined level. This will help you minimise losses and keep your accounts in the black leaving you to fight another day on subsequent trades.

A limit order will instruct your platform to close a trade at a price that is better than the current market level. If you opt for a trading bot they will use pre-programmed instructions like these to enter and exit trades in line with your trading plan. These are perfect for closing trades near resistance levels, without having to constantly monitor all positions.

Once youve placed your trade and stop or loss limits, your profits will shift along with the market price. You can view the market price in real time and you can add or close new trades. This can be done on most online platforms or through apps.

If your stop loss or limit order hasnt been activated you can close it yourself. Simply select close position from the positions window. You will be able to see your profit or loss almost instantly in your account balance.

Choosing the right market is one hurdle, but without an effective strategy, your profits will be few and far between. You need to find a strategy that compliments your trading style. That means it plays to your strengths, such as technical analysis. It also means it needs to fit in with your risk tolerance and financial situation.

Below two popular and successful CFD trading strategies and tips have been outlined.

This simply requires you identifying a key price level for a given security. When the price hits your key level, you buy or sell, dependent on the trend. The main thing to remember with breakout trading is to avoid any trades when the market isnt providing clear signals.

If you cant quite tell which direction the overall trend is moving in then give it a miss. This is where detailed technical analysis can help. Use charts to identify patterns that will give you the best chance of telling you where the trend is heading.

This is all about timing. Your plan rests on the knowledge that trends dont last forever. If a stocks price has been on the decline then you identify a point where you believe its near the end of the trend. Then you enter a buy position in anticipation of the trend turning in the other direction.

You can follow exactly the same procedure if the price is rising. You can short a stock that has been increasing in price when you think a sharp change is imminent. Both Wave Theory and a range of analytical tools will help you ascertain when those shifts are going to take place.

If youre looking to really bolster your profits consider these tips from top traders. Learn from their mistakes and hopefully, you wont run into the same expensive pitfalls.

Leverage is your greatest asset when youve made the right trade. The temptation to increase your position sizes when youre winning is difficult to resist. However, there is always a loss on the horizon.

You dont want to be the trader that turns a small account into a huge account, only to end up back at square one. So, you need to be smart. Nobody wants the margin calls and the stress that come with big losses. As Paul Tudor Jones famously said, Dont focus on making money, focus on protecting what you have.

Having said that, start small to begin with. Keep your exposure relatively low in comparison to your capital. Its a good idea not to leverage more than 3 times your account size, particularly at the beginning.

As your capital grows and you iron out creases in your strategy, you can slowly increase your leverage.

A bit like a diary, but swap out descriptions of your crush for entry and exit points, price, position size and so on. This will be your bible when it comes to looking back and identifying mistakes. CFD trading journals are often overlooked, but their use can prove invaluable.

Hindsight is a powerful force, dont waste it. Youll be able to identify patterns, reflect on your trading emotions and streamline strategies. A thorough trading journal should include the following:

It may sound time-consuming but it will allow you to constantly review and improve. Youll make smarter and faster decisions, whilst those without are still scratching their heads wondering what theyve been doing wrong for the last few weeks.

Used correctly youll be able to minimise your losses, keeping you in the game. Each trade you enter needs a crystal clear CFD stop. This is because emotions will inevitably run high and the temptation to hold on that little bit longer can be hard to resist. As William ONeil correctly pointed out, letting losses run is the most serious mistake made by most investors.

So, define a CFD stop outside of market hours and stick to it religiously. This will also help you anticipate your maximum possible loss. You can then use the time you would be fighting an internal battle to research and prepare for the next trade.

When youve completed your research and youve finally got the capital to start trading, it can be hard to resist jumping in head first. However, the switched on day trader will test out his strategy with a demo account first.

Plenty of brokers offer these practice accounts. Theyre funded with simulated money, making them the ideal place to make mistakes before your real money is on the line. Not only can you test your strategy and get familiar with CFD trading markets, but theyre also an effective way to try your brokers trading platform. You can make sure it has all the charting and analysis tools your trading plan requires.

When youre comfortable and seeing consistent results on your demo account, then upgrade to a live account.

Nobody likes to hear it, but school isnt over. The best traders will never stop learning. You need to keep abreast of market developments, whilst practising and perfecting new CFD trading strategies. Learning from successful traders will also help. To do all of this youll need to utilise a range of different resources. To name just a few:

Although you can trade CFDs all over the world, where youre based and the market youre trading in can throw an expensive spanner in the works. CFD trading in the USA will be different to that in the UK, Australia, India, South Africa, and Singapore.

This is mainly because of taxes. Different countries view CFDs differently. Some consider them a form of gambling activity and therefore free from tax. Some countries consider them taxable just like any other form of income.

The tax implications in the UK, for example, will see CFD trading fall under the capital gains tax requirements. Although you get a 10,100 annual exemption, any profits that exceed that will be taxed. This means you should keep a detailed record of transactions so you can make accurate calculations at the end of the tax year.

So, before you start trading, find out whether youll pay personal income tax, business tax, capital gains tax, or if youre lucky, no tax. Once you know what type of tax obligation you will face you can incorporate that into your money management strategy.

For more detailed guidance, see ourtaxes page.

Day trading CFDs can be comparatively less risky than other instruments. Having said that, it will still be challenging to craft and implement a consistently profitable strategy. If you want to be a successful CFD trader you will need to utilise the educational resources above and follow the tips mentioned. As successful trader Alex Hahn pointed out, If you master your thinking and your emotions, nothing can stop you. So, the ball is in your half of the court now, go and turn it into gold.

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All contents on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalised advice before you make any trading or investing decisions. m may receive compensation from the brands or services mentioned on this website.

Risk Warning: Trading CFDs on leverage involves significant risk of loss to your capital.