CFD trading has become very popular among investors in the past decade. What’s so captivating about CFD is the fact that you will be allowed to trade without owning an underlying asset. You will only be paying for the difference at the opening and closing price. Investors have become very appreciative of CFD because of this advantage.

Aside from the advantage of not owning an underlying asset and yet you are allowed to trade, CFD also uses leverage that helps you increase your exposure in trading. With leveraged products, you will be allowed to invest more funds more than the ones found in your trading account. But what’s the catch? Here are some of the most profitable strategies that you can use in CFD Trading.

News Trading                            

News Trading is ideal for scalping and works well with CFDs as it has a low transaction fee yet it offers higher flexibility. In most cases, CFDs are used either with day trading, intra-day, or a scalping strategy. These options do not require you to pay huge fees in case you want to keep your positions available all night. Though less costly, it is important to strategize and allocate some of your time to succeed in every trading session.

Scalping is one strategy that perfectly matches with CFD. However, if you want to succeed in this strategy, you must utilize the news trading. In news trading, you are obligated to follow a financial and economic calendar that lets you be aware of the events and assets that could impact on your underlying asset. There are online calendars that are very popular among traders, you must check some of them.

Pair Trading

Another strategy used in CFD is pair trading. It is a market-neutral strategy where you can use it with currencies, 2 ETFs, commodities, and others. One good thing about pair trading is that you can use it even if the market’s volatility goes high or low. The direction of the market is not very important in this strategy.

In pair trading, you will be asked to choose the weak and the strong asset which depends on the trend. Upon identifying the weaker asset, you now need to open a long trade on the weaker asset while the stronger asset will have to a short trade.

Hedging

Hedging is a strategy that is mostly likened to insurance. For example, your car has an insurance policy that shields it against accidents. In this matter, if your car suffers unfortunate accidents, you will be shielded from all the negative effects. As for trading, hedging is used to reduce the risks of involvement in trading. As for big investors and traders, they mostly use hedging to protect their huge investments and to counter possible downpour.

As much as possible, you need to use CFDs as protection for your traditional investments. Taking advantage of this price volatility is a necessity as there are a lot of factors that can affect your trade in the financial market.