Can you make millions on CFD trading? (2024)

CFD trading comes with a lot of risk, but this doesn’t mean that large profits aren’t possible.

While there are a lot of stories of people who have profited by trading online, there are equally a large number of people who have lost their money. Some argue that there are reasons behind the successes and failures of traders. Those who make profits share similar characteristics, while those who incur losses tend to also exhibit similar traits, such as fear of missing out, greed, lack of self-control, impatience, and a lot more.

Trading cannot be learned in one day

But trading is not easy or something that can be learned in one day. Are amazing traders born, or do they become so great by trying, learning, practicing, and developing their skills through the years? There is such a thing as talent and a knack for numbers, but the truth is that trading is also based on technique, knowledge, and experience.

But becoming a millionaire through trading isn’t an easy fit, as it involves and depends on so many different factors. One of the ways to make crazy money is by starting with a decent amount of money too. The more you start with, the more you will likely make. If someone starts off with $600,000 in their account, it will be easier to become a millionaire than if they started off with $600 in their account.

While a select few may reap big rewards trading CFDs, the majority of traders who start trading ignore some of the basic rules and tend to make common mistakes that result in loss of money. However, by focusing on some key elements, especially those factors that you can control and manage, such as building and developing your trading education and understanding and using risk management techniques, you will be able to cultivate a more positive environment, and you will start seeing more consistent results.

Is it easy to make money in CFD trading?

Well, excluding beginner’s luck, CFD trading is difficult, and to be able to make good money trading CFDs, you will need to practice and gain experience in how the financial markets work. An average of 75% of retail traders tend to lose money when trading CFDs. While this may not represent the overall experience of all traders, with smaller trades losing less and experienced traders making more, it does provide a clear idea of the market and why a lot of beginner traders find CFD trading unprofitable. At the end of the day, it is all down to maintaining a professional and disciplined attitude and taking risk management measures.

Capital considerations

While here we can provide a few pointers of what to do and how to trade with CFDs effectively using some basic strategies to reduce your risk, the big question to consider is also that of capital. How much money can you afford to invest in trading? So, even if you are a great trader, if you don’t have enough funds in your account then you won’t make a lot of money.

Profitable CFD traders who pursue trading on a professional level aim to make around 10% to 20% of their annual salary. They do this by running a net flat long/short portfolio of CFD positions so that they are buying CFDs on stocks that they think will go up and are also selling CFDs on stocks that they think will go down. They basically aim to make money no matter what is happening in the underlying market.

So, if you only have a CFD account with $10,000 in it, even if you make 50% profit a year, that’s still just £5,000 a year, which is not enough considering the risks you are taking.

Have you considered copy-trading?

You can make money with copy trading by trading normally on your account, and other traders will automatically copy your trades. Basically, you will be acting as a strategy follower, with other traders following your strategies, and if you lose money, so do they. With copy trading, you don’t manage their funds or control anyone else’s funds, but you can earn money based on how many traders are copying your CFD trades. It is a good way to earn a living from CFD trading.

Invest only what you can afford to lose

Before beginning CFD trading, it is important to understand the risks involved in any trade and trade with money that you can afford to lose. Before you start trading with real money, open a demo account first. Finally, it is wise to try out different trading strategies and techniques before deciding which is the best approach to follow.

A demo account is always a great option for beginners, as it will allow you to practice trading with virtual funds before risking your hard-earned money. Another option is copy trading or social trading, as mentioned above.

Pros and cons of CFD trading

While CFD trading provides you with the opportunity to trade on margin, trade both long and short positions, and access a wide range of markets, including forex, commodities, and indices, it is not without its risks. CFD trading may be a great way to make potential profits, but it is important to always remember that there is always a certain risk of loss involved.

Some of the risks of CFD trading include the potential for high losses due to the use of leverage, the possibility of closing a position due to a sudden change in the market, and the need to always remain vigilant and constantly monitor your positions. Additionally, CFDs are not suitable for everyone, and it is important to understand all the risks involved before deciding to trade.

How do CFD brokers make money?

There are many ways that CFD brokers make money, such as fees and commissions. They also make their money from the difference between the bid and ask prices, or, otherwise, what is called the spread. Less apparent is that CFD brokers may act as market makers and could be the counter-party to your trade, so they may potentially profit when you lose on the trade.

IronFX CFD trading

When it comes to trading, selecting the best CFD broker will help you avoid risky mistakes and get all the help you need to go after consistent profits. While profits may not be guaranteed, always expect a certain amount of loss, even if you are a more confident and expert trader, as the market is volatile and risky. But risks come with rewards, and taking a certain amount of risk could be rewarding.

IronFX provides extensive educational resources, dedicated customer support, and your own account manager to help you reach your goals in a more sustainable way. More than 1.5 million traders have chosen IronFX, and if you are just starting to trade, give them a try. Make sure that you do your own research, practice on a demo account, and develop your skills so you can be ready to take on the markets with confidence.

Disclaimer:
This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked in this communication.