The 3 CFD Trading tips you should know

CFDs can be tricky and maintaining a consistent profit/loss ratio on CFD trading is hard to maintain. Typically, CFD traders that don't read tips and tricks or learn from their mistakes suffer the most. You must maintain to be a successful trader long term and this article will provide you 3 tips and become just that. Before that, you should have these three goals in mind:

 -       Increase your profit ratio overtime

-       Learn from your mistakes

-   Always main to be a successful CFD Trader no matter how experienced you are in your journey

Let’s have a quick overview.

What are CFDs?

A Contract for Difference (CFDs) is a leveraged instrument.  The basic idea is that two or more firms mutually agree to sell an asset to each other at a price that is not subject to the competitive pressures that drive market prices, and which enables each firm to obtain the maximum return on its capital investment without regard to actual unsold quantities of the asset's fundamental property (such as oil).


A contract for difference is a term used to describe any agreement in which one party pays another party in advance for a current or future transaction. In practice, it can mean that one party agrees to buy something from another at a certain price and then sells the asset to the buyer at a higher price later. In some circumstances, the two parties may even be affiliated enterprises, such as a real estate agent selling homes to lenders.

Example:

Let’s say you are buying 100 worth of Apple Assets at $10 each and selling them for $15 each. If you bought them at $10 each, and sold them for $15, that would be a positive gain of $5; but if you sold them for $8 instead, that would be a negative loss of $2 per assets.

Three CFD Trading tips to remember when trading

Trade with the trend

It's easier to trade with CFDs when the asset you want to buy has the least resistance. It's easier to speculate if the price is in your "safe zone"; what exactly is a "safe zone"? In some ways, it's your instinct that tells you if it's safe to buy or sell. It's also easy to go with the current market's flow this way.

Trade practically; not emotionally

One of the secret arsenals of successful CFD traders is that they trade practically, not emotionally. Having emotions like greed, fear, overconfidence, etc., while trading with CFDs is very dangerous, and it will only cause you more capital loss than profit. It would help if you get your emotions under control so you can trade better. Ask yourself questions like, “Is this a good time to trade?”, “Should I go short or long?” etc. Trading practically is key to becoming a successful CFD trader.

Trading Strategy

April 22–23, 1951; Battle of Yultong in Yeoncheon-gun, Korea. The UN forces were about to get overrun by the Chinese People's Volunteer Army 34th Division (Chinese Army), so they treated another trench line. However, the Filipino 10th Battalion Combat Team didn't retreat and chose to defend the line. Out of 900 soldiers of the Filipino 10th Battalion CT against the CPVA's 40,000, they won. They won because the Filipinos had a perfect plan and strategies. CFD Trading is the same; even if you have wealth, you'll lose everything without a good trading strategy. Having a trading strategy is an outstanding practice to have to become a successful CFD trader.

To summarize, CFDs are a double-edged sword. Not understanding what CFDs are and without planning on CFD trading has very severe consequences, but if you know CFDs and have a good plan, it can significantly benefit you.

Post a Comment

Previous Post Next Post