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By far the most general question requested among budding CFD traders is ‘what are the most beneficial CFD day trading schemes or the best winning CFD trading schemes that the successful CFD traders utilize?’

Here we’ll take a look at the top 5 reasons why day traders prefer to trade a contract for difference over other derivative products and uncover the most common CFD day trading plans.

No overnight financing
CFDs have surely evolved into the ideal choice for short term day traders and there are a couple of basic reasons for this. Initially, CFDs incur a financing rate when you keep a position overnight. The financing for long positions is usually the RBA rate (cash rate) +2%. So if the RBA level is 7% then you pay 9% each year calculated back as a day rate. One option to avoid this is to close your position before the trading day has ended up, therefore avoiding the CFD financing rates.

CFD Leverage for day traders is incredible
One more key reason that CFD day trading strategies are quite popular is because of the fantastic leverage you have access to. You see, if you had $5,000 in a stock trading account then you are able to only trade $5,000 and a 5% move on $5,000 is just $250.

CFD liquidity on the top 100 ASX stocks is solid
One of the keys for short term day traders is a quite a liquid market and unlike other derivative items like options, CFDs mirror the liquidity of the underlying stock market. When trading utilizing a Direct Market Access (DMA) provider you can obtain access to and can notice the exact volume available on each stock at muliple levels of depth.

Low commission rates for CFD traders
By far the hugest highlight for CFD day traders rather low commission rates. Indeed some of the most popular CFD products are the index CFDs which are without any commission. This provides you access to a fast moving product with ample liquidity for no brokerage.
Even if you are day trading the top 100 CFDs, the brokerage is still too low. The great number of CFD brokers in Australia charge a minimum of $10 or 0.1% and this makes the day traders quite happy.

Day Traders preffer volatility which as been extremely high recently.
Volatility and CFD trading are the perfect pair. Day traders can’t afford to sit there watching a stock run nowhere, they wish movement and fast movement. When the markets are volatile, short term day traders are in their element and usually benefiting handsomely from the short sharp intraday movements.