CFD Trading Tips

Trading CFDs can feel overwhelming at first, and trading the financial markets have the possibility of being rewarding, but can also be extremely risky. Before starting to trade, the most important thing is to know what you are trading. Whether you choose to trade, Currency Pairs, Stocks, Indices or Commodities, it is always best to do research into the assets you are interested in, so that you can choose the best strategy for your trades. Educating yourself is the most important tool.

Analysis

There are many different tools, tactics and strategies that traders can use to help, in order to identify which assets they want to trade, and when the best entry and exit time is. When trading CFDs, technical analysis is a useful tool, as CFDs are not used predominantly for long-term positions. However, don’t rule out the usefulness of fundamental analysis as it can be just as important to know the fundamental health of the assets you are trading.

Plan your Strategy

Here are a few tips to remember when beginning to trade:

  • Before opening any position, it is important to do your own research due diligence and decide what assets suit you best, and then set a strategy in place.
  • Try not to trade based on emotions. Choosing a position and an action should be based on research, not on gut feelings.
  • Stick to your goals and have a long-term strategy. When you reach your goals, you can readjust and redefine your strategy.
  • Trade responsibly. Although using leverage and margin can be very tempting, as if you are successful, they can help you magnify your returns. However, should the price of the asset move in the opposite direction, it can have a major impact on your funds. Be sure you are controlling your trades and only risking what you can afford.
  • Use both Technical and Fundamental analysis when planning your strategy. Understanding both the patterns and the overall health of an asset can help you become a savvier trader.
  • Use features like Stop-Loss, or Take-Profit. By automatically closing your positions when specific conditions are reached, these tools can automatically minimize potential losses.
  • Decide what timeframe suits your trading type. Whether you choose to be a long-term trader, or shorter term, just make sure it meets your needs.

These tips are not enough to get you started in trading CFDs, but they are basic guidelines that can serve you well throughout your trading career.

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Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Past performance does not constitute a reliable indicator of future results. Future forecasts do not constitute a reliable indicator of future performance. Before deciding to trade, you should carefully consider your investment objectives, level of experience and risk tolerance. You should not deposit more than you are prepared to lose. Please ensure you fully understand the risk associated with the product envisaged and seek independent advice, if necessary. ForexTB does not issue advice, recommendations or opinions in relation to acquiring, holding or disposing of any financial product. Forex TB Limited is not a financial adviser and all services are provided on an execution only basis. Please read our Risk Disclosure document.

 

Regional Restrictions: Forex TB Limited offers services within the European Economic Area (excluding Belgium) and Switzerland.

 

Forex TB Limited does not issue advice, recommendations or opinions in relation to acquiring, holding or disposing of any financial product. Forex TB Limited is not a financial adviser and all services are provided on an execution only basis.

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