5 things to know about trading CFDs in 2025
Thinking about getting started with CFDs? There are some essentials you need to know first.
Sponsored by Vantage. To learn more about trading CFDs, visit the Vantage website today. Trading CFDs/FX carries risk and is not suitable for everyone. Refer to our PDS and TMD. Vantage Global Prime Pty Ltd, AFSL 428901.
CFDs are a complex investment product. So it's important to do your own research before you get started.
1. You need the right platform in place
One of the most important considerations for CFD traders is picking a platform to use.
Let's look at Vantage as an example.
Vantage is an award-winning, ASIC-licensed broker with 1,000+ markets available.
Vantage is considered a low-cost CFD broker that also provides access to trading services.
A low minimum deposit of $50 is required to start trading.
You're also able to open an account in less than 5 minutes.
Other Vantage features include:
- Access to 1,000+ markets, including Forex, Indices, Commodities, Share CFDs, ETFs, Bonds and Cryptocurrency.
- Multiple trading platforms, including Vantage APP, Metatrader 5, Metatrader 4 and TradingView
- Demo account for risk-free practice
- Phone app access
- Educational support through Vantage Academy
- $0 commission on gold CFDs*
You can also read a review of Vantage's services right here on Finder.
2. It can be risky
Although all investments have risks, CFDs are considered to be particularly risky.
This is because a CFD lets you take a position on the future price of an asset, and you could lose more than the funds you initially invested.
Accordingly, they're only recommended for experienced investors.
There are also ways to mitigate risk, too. Your investment strategy should be carefully considered to accommodate potential losses.
Stop-loss and take-profit orders — available through MetaTrader — can help limit your exposure.
Vantage offers multiple account types – including RAW Classic and RAW Premium – which offer low spreads to help traders manage costs.
Similarly, using stop-loss and take-profit orders – like those offered through Metatrader 5 – you can set limits to the amount you're willing to invest.
3. Opportunities in both rising and falling markets
When you invest in CFDs, you're taking a position on pricing, rather than buying the underlying asset itself.
You can take both long (buy) and short (sell) positions depending on your market outlook. In turn, this means that you can still potentially profit when the wider market is down.
When looking at market trends, it's important to undertake careful research.
Metatrader 5 provides advanced tools for technical analysis and spotting market trends.
Services like Vantage Academy can help you expand your trading knowledge, and make more informed decisions when going long or short.
4. You can use leverage
One of the advantages of CFDs is that you can open a larger trading position with lower capital.
This means that profits can be greater with lower investments – however, your risk can also increase exponentially.
The amount of leverage allowed will vary according to a few factors:
- ASIC regulations
- The type of trading product
- The offering from the trading service
For example, Vantage offers retail customers a maximum leverage of up to 30:1 on FX major currency pairs. This is in line with the ASIC Products Intervention Order.
Whatever your position, it's essential to have risk minimisation procedures in place. You can learn more about leverage on the Vantage website.
5. They can be useful for diversification
Diversification is a key investment principle.
By having investments spread across a range of industries, assets and risk levels, you can potentially minimise risks and earn higher returns.
Vantage offers $0 commission* on popular US share CFDs like AAPL, META and NVDA. This can make it easier for traders to diversify their portfolios cost-effectively.
For advanced investors, CFDs can offer higher risk, but also the potential for higher reward.
Coupled with this is the fact that CFDs are also considered a relatively liquid asset.
This can be useful if a portfolio is comparatively illiquid, or tied up in long-term investments.
Because turnaround times on the contracts are relatively short, it means that funds – and ideally earnings – can be freed up for easier reinvestment.