When you first start with a contract for difference trading, there is a lot to learn. From different types of assets and kinds of trades to the use of stop losses, there’s an education in itself when you begin. But, as you start to master the basics, there’s still a lot to learn, new strategies to develop and new markets to master. Here are some tips to develop your CFD game.
Cultivate an edge
CFD trading is about making money, and other people are just as keen to make money from you as you are to make money from them. That means you need to cultivate an edge, something that gives you a boost ahead of the competition and keeps you as the one in the profit. Some examples of an ‘edge’ that people have cultivated and nurtured include:
- Having an excellent money management plan
- Developing a brilliant timing technique around when to enter a trade
- Having Zen-like patience and waiting for the right opportunities
- Making the most of your luck by not making mistakes
- React quickly to work news and use the information in your trades widely
- Adding to winning positions in a way that maximizes profit
Keep control of that leverage
CFD leverage is a powerful tool and is great when things are going well. You just keep increasing position sizes, and the trades are going your way. But, the good trader remembers that a downturn can be just around the corner.
It means that learning to control leverage is a key trait in all good CFD traders. Start with a small leverage and keep the total exposure of your capital low. When you start, trade with zero leverage up to a maximum of three times your account size. And, only start going beyond this very carefully.
Don’t forget those stop losses
As you gain more experience with CFD trading, there’s the temptation to think that you might not need stop losses – ignore this idea! You always need to use stop losses, regardless of your experience. Some of the most experienced and profitable traders in the world have achieved their position through the clever and consistent use of stop losses.
You know by now that emotion is your enemy when it comes to trading. Keep using your stop losses wisely to make sure you don’t get caught up in the excitement of a trade and suddenly find it has all gone wrong.
Keep evolving your trading plan
Back when you started trading, one of the basic tips you were given was to use a trading plan. As you mature in your trades, your trading plan is likely to keep evolving with you. Your experience will lead you to try new things and to attempt new trades and these can be incorporated into your plan. Some of the key factors to have in a plan include:
- Entry strategy – this will change as you undertake more trades
- Money management – you may have more capital to trade with or want to try new trades
- Risk management – how much risk each trade carries and what stop losses you will use with it
- In profit and initial stop losses – where you use which type and what the outcome will be
- Record keeping strategies – how much information you need to record to help with future trades
The right trading platform
The key to any CFD Trading is using the right platform and Weiss Finance is consistently one of Germany’s top CFD trading platforms. You can learn on the platform, develop your strategy and get more confident in your abilities as a trader, while increasing your profitable trades and making more money.
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