1. Sound risk management
2. A profitable strategy
3. The discipline to follow the strategy
Stop orders can be used to provide protection when trading. The stop orders must be placed into the market to protect your capital. By placing a stop in the market you will be exited from a trade if the market moves fast. This stop will limit the loss that occurs, by exiting you immediately, before that loss becomes larger. With CFDs it is possible to lose more than you have in your account, so it is vitally important that you use stops to limit your risk.
Win or Lose It Comes Down to Your Strategy
You can build your own profitable strategy or follow one that has already been developed. Which of these methods you choose is up to you, but do not underestimate the importance of following a profitable strategy.
As a start the strategy must be profitable in history. There are many programs available that allow you to test your trading ideas out to see whether they work or not. But just because a strategy works in history, does not mean it will work in real time.
Most CFD traders do not have a profitable strategy that they follow, as they have not done the work to develop this. Trading on market feedback is a recipe for disaster. If you are unclear on your strategy, you do not have a profitable strategy.
Just Do It
Trading is simple, but not easy. Following your strategy can be an extremely difficult thing to do. Every strategy will have times when it makes less money or even loses. Hopefully this change is temporary, but it is important to recognise if there has been a fundamental change and have strategies in place to manage this.
It is also important to recognise when the trading strategy is not working within the parameters of history and not to continue to follow a failing strategy. It is not always easy to follow your plan. Just like when you are on a diet understanding the diet is easy, sticking to it is much harder.
Trading CFDs can be very rewarding and these three CFD tips will assist you on the path to trading success. It may take you some time to master these three ideas, but it is certainly worth taking the time to learn.
