How CFD trading can help you develop a winning strategy

How CFD trading can help you develop a winning strategy

Many traders, especially those who are new to forex trading, suffer from the same problem: They don’t know how to develop a winning strategy. Nowadays you can find so much information about what works and what not, but it is often hard to filter out the right information among all that noise.


CFD trading could be an answer for these issues since it enables you to jump into action straight away with just 1 click of the mouse or touch on your smartphone/ tablet. You don’t even need to open a real account at any brokerage firm, you can trade CFDs in our Demo Account without any restrictions for as long as you like.

Benefits of CFD Trading

As we have seen so far: CFDs can be extremely useful when deciding upon a proper strategy by enabling traders to backtest different settings and assess how well their money management tactics work.


  1. Leverage can work both ways
  2. It is harder to make money without proper access to market depth analysis
  3. With CFDs you are not trading the actual asset with every position you take but merely betting on its price movements, which might seem like a great idea at first but it leaves your funds open to more risk if things go south instead of north.


Since CFDs have no expiry or settlement date you can enter into any position whatsoever and keep it open until whenever you feel like closing it. This gives rise to a new possibility in trading: Simulating different price movements with a time frame of your choice and assessing whether your current strategy performs well or not. You might want to try out different settings to find the perfect one for your trading style.

Money management

Another key aspect when developing a winning strategy is money management. Money is what makes the world go round, and the same is true for trading. It might take relatively small amounts of funds to enter a trade, but you can lose everything in an instant.


To prevent this from happening certain rules must be obeyed when it comes to your capital management. With CFD trading you will need less money up front to get started, but since it allows you to use the leverage of up to 1:300 on forex traders can open positions with as little as 0.01 lots. This makes it easier from a financial perspective not to have too much money tied up in one single position at any given time but at the risk of losing more if things don’t work out as planned.


This brings us back to the initial starting point: Developing a winning strategy. With such high leverage, it is extremely important to use stop-loss orders to get out of losing positions and practice money management if you want your funds to last longer than just a few weeks or months. You can use our free CFD trading simulator to assess how different strategies work for you and which settings would be best suited for your forex trading account.

Market Depth Analysis

As we have seen before, when developing a strategy, one has to keep an eye on several factors to find the optimum solution. In addition, variables such as market depth analysis play a major role in the bigger picture. This information is not readily available unless you are a large institutional investor with access to the market depth charts.


The lack of transparency makes it hard for individual traders to get their hands on this data, but there are tools out there that can help you figure out what’s going on in the background. What does this have to do with developing a winning strategy? Well, if you have access to all this information you will know exactly where the price of an asset is heading next and what levels could be reached before another big move takes place.