Trading CFDs & Forex

Foreign exchange market is one of the biggest markets out there. You are able to trade currencies 24 hours a day from midnight Sunday up until midnight Friday. CFD (Contract for difference) trading has the same fundamentals as trading forex but you can also trade in the stock market, crypto currencies, equities, index, commodities etc. 

If you are starting out in forex/CFD trading its probably best to stick to trading one of the major currency pairs in the beginning of your venture, for example GBP/USD, EUR/USD, USD/JPY etc. The profits you make would depend on how well a currency does compared to the other within the pair. If for example the economy in the United Kingdom is showing great promise and the value of GBP is rising and at the same time the United states economy is crashing then the profits you will make betting on GBP to do well against the USD will be great. 

When trading any pair, remember it’s the first quoted currency in the currency pair you are buying or selling. If you went for GBP/USD then you are speculating for GBP to do well. If you think that GBP is going to drop then you would sell using the same method and take your profits.

Don’t worry too much about the fact that this is a 24 hour market and loose sleep over a trade you have started, many new investors find it really stressful in the first couple of trades as they think what if the currency drops during sleep, so they are up all night checking how well they are doing. There are many ways to avoid this, for example by putting in ‘stop losses’, which is when you put in a amount you want the currency pair to be sold at if things go bad, so you don’t wake to a heavy loss. On the other hand you can also put in ‘take profit orders’ where you put in a sell order of when you think the currency could reach it’s peak.

Now as forex/CFD trading is leverage trading, there could be examples of when you put in a order for 10's of thousands of pounds, but only really put in a small percentage of physical cash. This is by far the most high risk investments as you could loose a lot more money than you have actually put in. However, on the other hand you could win big and make a lot of money in a short period of time. So invest wisely, it is commonly know almost 90-96% of traders lose money and quit trading forex, so really understand what you are doing before making your first trade.

CFD is a contract between yourself and the CFD broker for the difference of the price at the opening and closing of a trade. You could either go long or short depending on how you think a trade will go, for example if you think a company will be doing really well up until now to the next day then you would put in a long order for one day, using the same principle for a short order if you think the company will perform poorly the same day. You can put in orders for any given stock at a price for any given time you want.

If you are serious about trading then the most safest way to start is to open up an account with one of the trading platforms, such as Plus 500 & Trading 212 to name a few, and start a practice account. They will start you of with a set amount of practice money, in which you could practice leverage trading in live markets, risk free.

See below further details on some of the available platforms you could use to start your trades and get your free practice account.