CFD (Contracts for Difference) trading, like any form of trading, can be difficult, especially for new adopters who are not familiar with the terminology, research and discipline required to become successful in trading CFDs.
Trading CFDs using a modern platform can definitely be confusing at first, that why it’s well worth first timers checking out a demo account before starting with their own money. Once you begin to understand how the platform works, then you need to take into account factors such as that the leverage available using CFDs can make a huge difference to your profit or loss when trading. Leverage and risk are big topics in CFDs, and can heavily influence your trading strategy.
Of course, once you master all this, to be profitable you need to be able to predict which way the price of the underlying asset is going in order to make a profit, or at least get it right more often than you do not. This is difficult even for experienced traders and speculators.
Having a trading strategy is critically important when it comes to trading CFDs. Knowing when to enter and exit the market has a huge influence on your end result, and being able to identify buy and sell signals from charting or other methods are one way of doing this. I wrote about a few tried and tested methods for identifying these in articles linked from my guide to CFD trading strategies.
So is CFD trading Difficult?
So, in answer to the general question, is CFD trading difficult, the answer in my opinion is yes, it is. Thanks to online trading, the barrier to entry to trade CFDs is not that high, and demo accounts make learning some of the basics of trading without risking your own money possible. However predicting price direction in the short term is not for the faint hearted and this is what drives your profitability once you understand all the bells and whistles of an online CFD trading platform.
The availability of leverage in CFDs (that’s their biggest benefit/risk) makes potential for fast profits (and losses..). When you have your head around how your platform works, you’re now in the world of the trader – can you contain your greed or fear well enough to make a profit? It’s a question that has been asked on trading floors for many years.
Yes, trading CFDs is risky and difficult, like many high potential reward activities in life and trading. I strongly suggest you have a go first using a demo account, such as the one I discuss in this article.