CFD traders do not own the underlying asset nor are they trading the asset itself but are instead speculating on whether its value will increase or decrease. For more information on CFDs, check out our Contract for Difference (CFD) trading guide. If the current close-out percentage level is 50% and you have four trades open that each require $500 worth of position margin, your total position margin requirement will be $2000. For traders new to CFD trading, it is advisable to start with smaller leverage ratios. This allows you to gain experience and build confidence in managing risk without exposing yourself to significant losses. As you become more experienced and comfortable with leveraged trading, you can gradually increase the leverage used in your trades.
In order to control prospectivelosses and provide traders control over their risk exposure, stop-loss orderscan be used. Additionally, traders can customize their risk profile to fittheir own tastes by selecting the desired leverage amount. You can manage risks by using stop-loss orders, diversifying your portfolio, and only trading with money you can afford to lose.
Instead of directly buying a share, CFD trading means that you buy or sell a contract between other traders that determines the value of that share. If you think the asset’s price will go up, you will choose a long position (or buy) and if you think the value will fall, you will choose a short position (or sell). Using stocks as an example, when you buy a stock you will own a part of the company’s value. This is called ‘gapping’ and refers to the idea that a CFD can move in price between, for example, £5.50 and £6.00 without stopping at any of the price points in between. Therefore, even if you’d planned to close a trade at £5.55, you might not get a choice.
Market analysis, discipline, and risk management remain essential regardless of position size. How safe it is depends largely on the trader’s knowledge, experience, risk management, and choice of broker. CFDs are commonly used because they support trading in both rising and falling markets and cover a wide range of assets, including stocks, indices, forex, commodities, and cryptocurrencies. For FortressFX traders, leverage should be treated as a tool within a broader trading framework—one that prioritizes consistency, education, and risk management above short-term excitement.
However, it is vital to recognize that while leverage can boost profits, it equally has the potential to increase losses. CFD traders benefit from the ability to use leverage, as well as the flexibility to speculate on both rising and falling markets. However, leverage can magnify losses as well as gains, with market volatility and potentially overnight holding costs also posing significant risks for traders. 51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. Trading in leveraged Foreign Exchange and Contracts for Difference carries a high level of risk and may not be suitable for all investors.
If you fail to meet the margin call, the broker may automatically close your position to limit further losses. This is known as liquidation, and it can result in significant financial loss. To avoid this scenario, it is essential to closely monitor your trades and use risk management strategies, such as stop-loss orders, to protect your capital. When you trade on margin with leverage, your broker will require you to maintain a certain amount of equity in your trading account.

The goal is to use leverage wisely enough to remain in the market long enough to benefit from future opportunities. Leverage remains one of the investing instuments most powerful tools available in forex and CFD trading. Being Built for Traders, by Traders, TradeFXBook helps transform trading activity into meaningful performance insights.

Counterparty and operational risks include broker solvency, platform outages, security breaches, and limited market liquidity causing slippage. CFDs are complex products and may not suit all investors; traders should understand the mechanics, leverage, and potential for losses before trading. Depending on the positions you hold, and how long you hold them for, you may incur CFD holding costs. These holding costs are applied to your account on a daily basis if you hold positions on certain instruments overnight past 5pm New York time.
For example, many of our share CFDs have a margin of 20%, most major indices have a margin of 5%, cryptos typically have a margin of 50%, and most major forex pairs have a margin of 3.33%. The cumulative effect of these transaction costs can erode the profitability of CFD trading, especially if a trader is not careful with their trade execution and timing. Traders should be aware of the costs involved and factor them into their risk management strategy. Successfulleveraged traders stay up to date with market news, economic indicators, andgeopolitical events that may impact the markets they trade in. Follow reputablefinancial news sources, utilize economic calendars, and stay aware of corporateearnings announcements. Having a solid understanding of market fundamentals canhelp you make more informed trading decisions.
For example, for share CFDs, the contract size is usually the equivalent of one share of the company you’re trading. For forex, there are standard lots which equal 100,000 units of the base currency, or mini lots that are equal to 10,000 units of the base currency. CFD trades are standardised into lots, but each market has its own minimum number of contracts that aim to mimic how the asset is traded on the live underlying market. Using DMA means there’s no spread to pay because these trades are charged on commission. But, while DMA can be a powerful tool, there’s no guarantee that you’ll find prices that are better than the prices we offer.