CFD trading includes a few golden rules, and to become an expert in CFD trading one needs to know these rules. It has often been seen that traders without knowing the rule of CFD, enter the market and start trading. As a result, they fail to achieve success. So it is said that you should know the market better before entering the market.
If you are a novice trader, and want to trade in CFD, then you should know as well as maintain the golden rules of this trading. Some of the rules of trading CFD successfully are discussed below. Also if you want a guide about forex.
1. Cut your losses and let your profile run:
There are actually multiple reasons behind the losses of CFD trading. But one of the major reasons behind this can be not following the rules properly. So follow the rules of trading. The first rule of trading is to forget your losses and let your profit run. Trading is nothing but a game where wins and losses are the two indispensible part of it. You can gain a series of small profits and minimise the catastrophic losses keeping this rule in mind.
2. Use logic, not emotion:
The second rule of thumb is - don’t give importance to your emotions, rather think logically. Always remember, a gut feeling can give you big profits occasionally, but trading logically can give you big win consistently. So, don’t pamper your emotions, rather, use your logic.
3. Use both fundamental and technical analysis:
The next rule is to use both fundamental as well as technical analysis for CFD trading. Following this rule will help you to get better results and gain significant profit in CFD trading. With the help of fundamental analysis, you can trigger off the trade, and technical analysis enables you to know the time of actual entry.
4. Take your weaknesses into account:
In terms of trading, nothing can be more helpful than knowing your own weaknesses. Observe your psychological condition during a trade and how it changes after winning or losing it. Now note down your weaknesses - like fear or greed, and learn how to get the better of them. Try to trade under a good trading strategy and strict money management rules. These will help you to achieve long term success.
5. Limit exposure to a single trade:
In order to be a successful trader, know how to limit exposure to a single trade. Because betting 50% or 100% of trading capital does not make you a trader, but a gambler instead. So act like a wise trader and don’t risk more than 2% of your trading capital on a single trade. This will help you to get continuous success, and losing a single trade cannot wipe you out.
These are the top 5 rules, which will help you to trade in CFD successfully. But always remember, you need to be highly disciplined and follow your strategy strictly in order to do so.