CFD Trading Tips by CFDagent
These are some essential trading tips for CFD Traders:
-1- Choose Partners Wisely
-2- Specialize in a Couple of Assets
-3- Manage your Leverage
-4- Keep a Detailed Record of your Trades
-5- Control your Prehistoric Brain
-6- Apply a Strategy / Trading Plan
-7- Run your Profits and Cut your Loss
-8- Making Money Starts from not Losing Money
The 8 Essential Tips for CFD Traders Explained
(1) Choose CFD Providers Wisely
Choose only among high regulated CFD providers offering segregated client bank accounts. Moreover prefer CFD companies which are not based in offshore countries and that have been around for more than 5 years. In other words, when trading online give extra weight to the safety of your money. There are many other important issues when choosing a CFD broker including availability of fund methods, spreads, availability of desired assets, availability of platforms etc.
(2) Focus on a Couple of Assets
It is far better to concentrate on a few assets than trying to trade every available CFD instrument. Become an expert of the assets your trade. There are many professional traders who choose to trade solely one asset, for example they trade EURUSD or Gold or Oil. These 3 assets enjoy great liquidity and almost perfect information. High liquidity means lower trading cost and good information means better chances of success.
(3) Control your Capital Leverage
Capital leverage is an enemy and a friend at the same time. When trading CFDs, capital leverage can be up to 50:1 or even more. The catch here is that when you increase your leverage you increase 3 things:
(i) Your Profit Potential
(ii) Your Loss Potential
(iii) Your Trading Cost (many forget about it)
Most traders become so greedy that open positions in the maximum available margin. What happens next is simple. They are forced to narrow their stops in order to limit their loss potential. As they place narrow stop-losses they get stopped-out very often and lose their money in no time. CFD beginners should not use leverage more than 5:1.