Because CFDs are complex instruments, trading them carries a high level of risk. If the market moves against traders' expectations, they may lose money because the trade's value can fluctuate. As a result, CFD risk management is a critical factor to consider and incorporate into their trading routine.

After setting up an account and developing a trading strategy, traders must decide how much they are willing to risk in order to develop an effective CFD risk management strategy. If they are risk-averse, they will look for opportunities with lower risk-to-reward (R-R) ratios.
For example, if traders want slow and steady growth, asset classes with higher volatility should account for a very small portion of their portfolios. Diversifying across all asset classes is highly recommended in order to increase the likelihood of profitable trading opportunities and reduce risk.