CFD trading might apparently seem pretty simple. But believe me, without the right approach and the best strategies you can never multiply your profits consistently. So if you’re a newbie in CFD trading, here are a couple of tips and strategies that’ll help you maximize your profits and enjoy amazing returns in the long run.
- Try to preserve your capital
Well, while trying out the CFD, the first thing which you should ensure is to preserve your capital. This was even suggested by Marcel Link who explained why exactly one should concentrate on saving their capital. His book called ‘High probability trading’ suggested how a fellow trading enthusiast saw Marcel overtrading in his early days and suggested him to preserve his precious capital. So the first approach you should follow while trading is to forget about everything else and try your best to not lose any money. Remember, every dollar that you invested in the trade is precious. Therefore you need to make it a point to do everything possible to keep your money in your pocket instead of someone else’s.
- Always keep your edge
No matter how difficult and complex the trading gets, you will always need to have a positive approach about it. In other words, you will have to make it a point to stay an edge ahead of your competitors. In CFD trading, you will always find a group of professionals who are always looking out to strip money off you. But if you are smart, dedicated and disciplined enough, making profits and keeping your capital intact wouldn’t really be a big deal.
- Control the leverage of your CFD
Believe me, CFD leverage is so strong when things are in your favor and it might be the easiest thing then to increase the sizes of your positions as you. However, there is always a possibility of an inevitable loss that’ll constantly lurk around the corner. So make it a point with a smaller leverage of CFD. You should also keep the total exposure low as per your base capital.
- Concentrate on the stop losses
Stop losses are a highly significant aspect of CFD trading. They help in minimizing your loss which in turn helps you to preserve your base capital. Every such trade that you participate in should have a proper and clear CFD stop allotted to it. You should make it a point to identify that stop even outside the real-time live trading. It is very natural to be emotionally affected when your coveted position is quickly falling and it is exactly then you try explaining yourself how the stocks can be up almost miraculously. But believe me, this is far from reality. So make it a point to define the CFD stop outside your time of operation and adhere by it.
- Establish proper and realistic trading goals
Well, while one of your major goals would be to keep the amount of capital intact, the following one would be to stay in the trading game for at least. Survival is extremely important if you are looking forward to make a decent living out of CFD trading. You will therefore need to be highly disciplined and etch out trading goals that are realistic.
- Keep a trading journal
Your journal for CFD trading will help you to record your trades from time to time. It will help you gain clarity about your trade and will also help you to focus better on the strategies and patterns that you incorporate. While keeping a journal, make it a point to record what exactly you had bought or sold for the profit or loss, when exactly was the trade done, why was the trade conducted and so on. It should also have a chart that shows the potential entries, stops and estimated profit. You may follow companies like CMC Markets too.
- Try to scale between the trades
Although the trading accounts of most successful traders are neutral for a large part of the year. But there also will be a specific time in those twelve months where your profits will be unbelievable. The thing which you aren’t aware of is the fact that your capital needs to be kept intact even in the lean months. Right after that when the market aggressively starts adding winning positions, you will have to place your trades tactfully.
These are some of the best strategies to trade with CFDs successfully.