CFD Trading Assets

CFD Trading Assets: Determining What To Trade

CFD trading assets refer to those underlying financial instruments, usually traded in conventional financial exchanges, but which can be traded on the basis of speculation of their price differentials at various times without the trader taking physical ownership of the assets. These CFD trading assets are usually classified into asset classes. The following CFD trading asset classes exist in the market:

  • Currencies
  • Stocks
  • Commodities
  • Indices
  • Options
  • ETFs
  • Bonds
  • Interest rates

The big question is – should you be trading all these assets? If the answer is no, what kind of trader should be trading a particular kind of asset? This article attempts to provide that answer.

Kinds of Traders

There are three types of financial traders: beginner traders, intermediate traders, and advanced traders. Some may even add a fourth category; veteran traders. Each kind of trader has skills, trading mindsets and various kinds of approaches to the market. It is therefore important that a trader identifies the correct group that he/she belongs to, and trades the CFD trading assets that are best suited for that group.

CFD Trading Assets: Who Should Trade What?

1. Beginners

Stocks CFDs, also known as share CFDs, are particularly good for beginners. In addition to the limited number of hours that a stock exchange is available for trading, stocks are segmented into various markets across the world. It is therefore, easier for a stock CFD trader to trade on stock assets that are listed in exchanges that they are familiar with. For instance, it is easier for a German trader to trade the stocks CFDs on Deutsche Telekom, listed on the DAX30 exchange. For a German trader, this is a local company, listed on a local exchange and with exposure to local factors that could affect price movements. Such a trader may not have the experience to trade a stock from China such as Baidu. The segmented nature of the stock market, as well as the limited influences on stock prices, mean that beginner traders will find it easier to understand the stock CFDs that they trade.

The currency trading market is more complex, and when CFD trading assets such as Interest Rate derivatives and options are added to the mix, it adds to the difficulty level and may be too much for the beginner. Beginners should therefore, stick to the simpler CFD trading assets such as stock CFDs.

2. Intermediate Traders

Intermediate traders have had some trading experience and market exposure, which enables them to step up to trading more advanced CFD trading assets such as currency trading CFDs and perhaps commodity CFDs. Some of the advanced CFD types such as interest rate and bond CFDs may still be a bit too much for them to handle.

3. Advanced Traders

Advanced traders are very experienced and can take on all CFD asset types, including the very complex interest rate CFDs as well as vanilla options.


All CFD trading assets are not created equal. Some are simpler to trade and others have very complex contract specifications. In order not to bite off more than can be chewed, traders should be able to identify their market experience level and trade assets that commiserate with their market experience.

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