As a newbie in CFD trading, you might already know the gist of what CFDs are and how they work. But simply knowing what it is will not teach you how to master it. CFD trading is a pretty volatile market to get into, that’s why more experienced traders mostly take on it.
However, despite being risky, it continues to draw traders of all experience levels, including novices, seasoned traders, and big and small traders. But not all become successful since you face various risks that can either make or break your CFD career.
So if you want to decrease the odds of failing in CFD trading, you need to know these tips and tricks listed down below!
1- Look for a strategy and stick to it!
One of the hardest things in CFD trading, apart from the actual trading, is starting. This is because, at this stage, you’re still looking for your trading rhythm. You might switch strategies, and markets until you find your niche, and that is completely normal!
What are the best CFD trading strategies?
To help you start, down below is a list of the best CFD strategies around. All these strategies have their own processes, objectives and characteristics. To know which one will suit you best, here’s a rundown:
- Day trading – This is one of the most popular strategies around and is ideal if you prefer short-termed trades. As a day trader, you open and close multiple trades within a day and profit from minor market movements.
- News trading – This is another short-termed strategy that bases on current economic happenings, announcements and market expectations in the near future.
- Position trading – This is a long-term strategy and can take about days, a week, a month and even a year. Your goal as a position trader is to aim for major market movements. This strategy requires fundamental analysis indicators when speculating.
- Hedging – This is the safest strategy on the list and how it works is by holding an investment that will go in the opposite direction of your main investment. If your main investment decreases, the hedging will minimize or negate the entire loss.
Once you find a strategy that suits your exhange style, you need to stick to it. For any trade to become a success, a trader MUST stay focused, strict and attentive to one’s trade. You need to not let emotions affect any decisions you make when exchanging since this can greatly ruin your strategy.
2 – A good trading platform makes all the difference!
No matter how good you are, a bad platform can ruin and ultimately decrease your potential of profiting more. A good platform will have a better scope of markets, bartering tools, analytical tools, learning materials and low fees, allowing you to make the most out of a trade.
What are the best CFD trading platforms around?
To get a great market experience, you need to work with the best! Down below is a list of great platforms that are deemed the best for CFD trading!
- XTB – Offers commission-free from stocks, ETFs and more.
- Capital.com – Offers low forex CFD commission and fees on real stocks and has great chat and email support.
- IG – Offers quality web training, has tons of educational tools and provides great options for withdrawal and deposits.
- Admirals – Offers quick and free deposits and withdrawals and has low forex CFD fees.
To know if your current platform is considered a ‘good’ one, consider its fees, deposit and withdrawal requirements, range of CFDs available, credibility and quality features (charts, demo accounts, learning materials, bartering tools… etc.)
3 – Expend your trading portfolio
Although it’s recommended you stick to one trade as a newbie, it’s also a great idea to venture into other trades and expand your portfolio. How will you know and find your niche market if you don’t try others out?
In CFD trading, you can venture into various markets like metals, forex, indices, stocks, bonds, commodities and more! But remember, while expanding your portfolio, only take on trades you can handle!
Taking on too many trades can become overwhelming and might cause you more harm than good. So consider expanding but limit yourself to what you can handle.
4 – Don’t overlook trading prep!
One of the things most starting traders overlook is practising. CFD exchange is volatile and a tedious process, so it’s best to prepare yourself. There are various ways to prepare before actually wagering such as doing extra reading, practising on demo accounts, attending webinars and seminars, enrolling in courses and more.
Remember, you’re risking money so might as well be as ready as you can before getting into an exchange. To ensure a fruitful trade, always consider trading prep!
Now you know the 4 tips and tricks in CFD trading, use this to your advantage by applying them when trading. These tips and tricks are from other traders’ experiences and things they wish they knew beforehand.
Fortunately for you, others experienced these trials and errors so people such as yourself can learn from it as early as now.