How to trade CFDs

Contracts for difference (CFDs) have become a popular way for traders to dive into global financial markets. They offer a more flexible option with opportunities for leverage and the potential to profit in both rising and falling markets. As a leading platform where you can start CFD trading, CMC Markets invites you to explore our innovative platform and discover an array of products. 

This handy guide will give you a complete overview of how to trade CFDs, from account set-up and choosing products to risk management and even some advanced CFD trading strategies. Whether you’re new to CFD trading or trying to boost your skills, read on for some tips about taking advantage of the opportunities and challenges of trading CFDs. 

Understanding CFD trading

CFDs are financial derivatives. Traders can speculate on the price movements of various assets without owning the underlying asset. They are highly flexible instruments – meaning CFDs have both advantages and risks, which traders need to be aware of. Some of the key characteristics of CFDs include: 

• Leverage: CFDs let traders control a larger position with a smaller outlay of capital. For example, a leverage ratio of 10:1 means you can open a position worth $10,000 with just $1,000. But remember: while leverage can amplify gains, it also heightens potential losses, so risk management is essential. 

• Profit from rising or falling markets: Traders can take a long position (buy) if they believe an asset’s price will go up or a short position (sell) if they expect the price to fall. 

• Wide market access: CFDs cover a wide range of markets, including forex, stocks, commodities, indices and cryptocurrencies. 

• No ownership of the asset: Unlike traditional investing, CFD trading involves speculating on price movements without actually owning the physical asset. 

To learn more about the fundamentals of CFDs, read our What are CFDs? guide. 

Set up a CFD trading account with CMC 

Ready to get started with CMC Markets? Here are the steps to trade CFDs: 

1. Open an account 

• Visit the account set-up page and choose your preferred type (e.g. Individual, Joint, SMSF, Company, Trust). 

• Verify your identity, then review and submit. 

2. Get to grips with the platform 

• Take a good look around our CMC Markets Platform, where you will get an intuitive experience with access to powerful tools and educational resources to make your trading journey that much more enjoyable. 

3. Fund your account 

• Deposit funds securely using a payment method of your choice. 

4. Practise with a demo account 

• If you’re new to the trading world, try some demo trading for CFDs. You’ll be free to practise different CFD trading strategies with virtual funds to build your confidence – without financial risk. 

Explore the product library 

CMC Markets offers an extensive range of CFD instruments so traders can diversify their portfolios across multiple asset classes: 

• Forex CFDs: Dive into major, minor and exotic currency pairs, taking advantage of global currency market volatility. 

• Index CFDs: Trade leading indices like the S&P 500, FTSE 100 and ASX 200 to capture broader market trends. 

• Commodity CFDs: Speculate on energy products (e.g. crude oil), precious metals (e.g. gold and silver), agricultural commodities and more. 

• Share CFDs: Trade individual stocks from global markets, including the NYSE, NASDAQ and, of course, the ASX. 

• Cryptocurrency CFDs: Get exposure to digital assets like Bitcoin, Ethereum, and Ripple without needing to own the underlying coins. 

Explore the full product offering on our product page. 

Trade CFDs from price charts 

CMC Markets’ user-friendly platform makes trading seamless, allowing users to execute trades directly from price charts. It’s a feature that means you can act quickly on analysis: 

1. Choose your instrument: Open the chart for the CFD you want to trade. 

2. Activate trading from charts: Use the drop-down menu in the chart module and click ‘Trade from Chart’. 

3. Set trade parameters: Define your position size, entry price, stop-loss and take-profit levels directly on the chart. 

4. Confirm your trade: Execute the trade with just a few clicks. 

With innovative functionality integrated with analysis and execution, traders can capitalise on real-time market movements. 

Apply technical indicators and drawing tools 

Technical analysis plays a big part in CFD trading, and CMC Markets has a comprehensive suite of tools to support your trading goals: 

• 115+ drawing tools: Highlight patterns, identify key support and resistance levels, or annotate charts with notes for future reference. 

• Over 80 indicators, including: 

• Moving averages (SMAs and EMAs): Spot trends and filter market noise. 

• Relative strength index (RSI): Identify overbought or oversold conditions. 

• Moving average convergence/divergence (MACD): Detect trend reversals and better understand the market’s momentum​. 

Tools like this allow traders to better analyse price action and refine their CFD trading strategies. 

Monitor and close trades 

Having solid trade management skills is vital for successful CFD trading. Here’s how to monitor and close trades on the CMC Markets platform: 

1. Track live positions 

• Use the ‘Positions’ tab to see real-time updates on your open trades, including profit/loss, margin used, entry price and more​. 

2. Adjust trade settings 

• Modify stop-loss and take-profit levels via the ‘Modify Trade’ icon. 

• You can use a ‘trailing stop-loss’ order to lock in profits as the market moves in your favour. 

3. Close trades 

• To exit a trade, click the red ‘X’ next to the position. Specify the amount to close, then confirm the transaction. 

Amend your order settings 

CMC Markets gives you the flexibility to amend your orders as market conditions change. Using the ‘Positions’ tab, you can: 

• Adjust stop-loss or take-profit levels. 

• Convert stop-loss orders to trailing stops for better risk management. 

• Review and update order details to line up with your overarching strategy. 

Set trade alerts on the CFD mobile app 

To stay informed about market developments, use the CMC Markets mobile app so you’re always connected. 

You can configure and set alerts to notify you when an instrument reaches a specific price or target level. You’ll also receive real-time notifications and updates on market movements and trade triggers wherever you are. 

The result? You can make more timely decisions, whether you’re closing a position or initiating a new one. 

It doesn’t matter what level of experience you have – CFD trading for beginners through to experienced traders comes with opportunities. At CMC Markets, we make it simple to jump into global markets with total flexibility and potential for returns. Our Next Generation platform, broad product range and best-in-class educational resources make us the most trusted partner for entering the exciting world of CFD trading. 

Whether you’re just starting or looking to tighten up your current strategy, CMC Markets has the tools and insights you need for success. Opening a CFD account today is simple, so get started and discover the benefits of trading CFDs with one of the world’s leading platforms.