Spread Betting and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69.3% of retail investor accounts lose money when trading Spread Betting and CFDs with this provider. You should consider whether you understand how Spread Betting and CFDs work and whether you can afford to take the high risk of losing your money

Developing CFD Trading Ideas

CFD Trading ideas: How do you successfully trade cfd's?

To successfully trade CFD’s you must first develop your CFD trading ideas. Every trade starts with an idea. it doesn’t have to be 100% original as it’s difficult to come up with something truly unique. And it’s probably best that it’s not. After all, for a trade to be profitable it’s important that other investors come to think the same way you do and get on board, so total originality could be something of a drawback.

It has been said that truly bright and original thinkers don’t make the best traders as they’re often too early with an idea to profit from it. Nevertheless, there’s nothing like generating and developing your own ideas for building one’s self-confidence. This in turn should help you to come up with fresh CFD trading ideas in the future and help turn you into a successful trader.

You must also consider the approach you are going to take. In this guide we will look at the Bottom Up approach and the Top Down approach, in order to help develop your CFD trading ideas.

What is the bottom up approach in cfd trading?

If your CFD trading ideas involve the bottom up approach, you will be focusing on looking at small, everyday stuff. This is a particularly useful starting point if you’re interested in trading CFDs on the stock price of individual companies. The “bottom-up” approach can be as basic as looking at the shops in your high street, seeing what’s opening and what’s closing, thinking about why this might be and how could it change in the future.

Also, has your own behaviour as a consumer changed?  Which shops to you go to most and why? Are you cutting down on your visits to the coffee shop, or are you spending more in there on cakes and sandwiches? What about your friends and family? These are all questions which can help you build an understanding of the retail sector and develop CFD trading ideas.

Of course you’re more than likely to have your own area of expertise, either through work, studies or leisure time activities which will help you develop your CFD trading ideas. Have a think about how things are changing and if so how are these changes affecting you? It may be that there new software products you’re using. Is it possible that these could revolutionise the way your business is done? How about blockchain, the technology behind Bitcoin? It could be that your business or profession will change because of it. If so, how can you take advantage of these changes? Which companies look set to profit from these developments?  When you consider these issues try to think laterally. Don’t just follow one train of thought through to what appears to be its logical conclusion, but expand into other related areas. Then you can try to put this all together and look for trading opportunities.

What is the top down approach in cfd trading?

This means looking at larger issues such as the future for transport or future of energy and then thinking which companies are best (or worst) placed to benefit.

You may feel that self-driving cars could become the dominant form of transport in ten years’ time. What are the ramifications of this? Not just for car manufacturers, but for tech companies working on sophisticated sensors or satellites. It may be that satellites are replaced by new technology for instance. And if in the future we’ll be able to summon up a self-driving car through our smartphones, what does that say about the future of Uber, or car parks for that matter?

From here you’re just a few steps away from identifying companies that could benefit from future developments and those that will have to adapt or die. Suddenly you could have a clutch of potential trades that you could capitalise on through CFDs. If your ideas are solid, your technical analysis good and you get the timing right, it may not be too long before other investors catch on and momentum builds. In this way it’s possible to get in at the beginning of a profitable trend.

By developing your CFD trading ideas in this way you’ll have your own reasons for doing the trade. This is much better than taking trading tips from third parties. After all, we can’t know what another person’s full trading plan is, or if they’ve even got one. This means that we have no idea what their tolerance to risk is, let alone how it may compare to ours. That may not matter if things are going well, but what do you do if this “sure-fire thing” starts to go wrong? Developing your own CFD trading ideas helps to build self-confidence and gives you the tools to trade again and again. This will help you to be a successful trader.


Spread Co is an execution only service provider. The material on this page is for general information purposes only and nothing contained herein constitutes (or should be taken to constitute) financial or other advice which should be relied upon. It has not been prepared with your personal circumstances, financial situation, needs or objectives in mind, therefore any actions taken or not taken by any person on the basis of this material is done entirely at their own risk. Spread Co accepts no responsibility whatsoever for any such actions, inactions or resulting consequences. No opinion expressed in the material shall amount to (or be taken to amount to) an endorsement, recommendation or other such affirmation of the suitability or unsuitability of any particular investment, transaction, strategy or approach for any specific person. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. As such, this communication is not subject to any prohibition on dealing ahead of the dissemination of investment research. Nonetheless, Spread Co operates a conflict of interest policy to prevent the risk of material damage to our clients.

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