CFD trading vs futures: what is the difference?

Are you a newbie CFD trader? If you answer “Yes” to both questions, then this article will surely help you out. If you want to hear one most helpful CFD trading secret, it is this: never trade against the prevailing trend, but always with the anticipation of that trend reversing. Do you not understand what a bearish stop loss order means? You can find out about other popular CFD trading secrets here.

Every CFD trader needs to have a trading plan that is well-planned, based on market parameters, and can be implemented as per his or her investment objectives. Trading CFDs can be made easier if you follow some basic rules and tips. The first step in trading CFDs is to formulate a single trade plan that incorporates all of your CFD strategies. This single plan should cover both long and short positions and should be prepared in advance of you starting to trade.

Some other important cfd trading South Africa suggestions include considering the leverage of the positions that you intend to take, stop losses and margins. Leverage simply refers to the greater number of shares you are willing to trade with, as well as the greater number of shares you are willing to lose in the event of a loss. 

Ideally, you should never use more than 10% leverage, otherwise, your returns will be meager. Always remember that leverage alone can not determine your trading success. It is only one of the many factors that come into play, together with other such factors, like your entry and exit points, risk management, etc. In other words, consider these factors in combination with your trading plan to get the best results.

Another great CFD trading suggestion is to open a demo account before actually going live. While it would appear to make sense to start trading with real money right away, this could prove disastrous in the long run as the markets can become very volatile when things are happening too fast for you to keep track of. This is where having a demo account could prove quite helpful. 

Using a demo account, you can practice everything that you have learned so far – without having to risk any actual money. It is also a good way to familiarize yourself with the underlying markets and their nuances so that when you do enter into CFDs, you know exactly what you are doing.

You should also be familiar with the concept of reversing a loss. The stop loss is the point, usually set at a specific amount, at which you are willing to liquidate your holding assets if a negative margin occurs.CFDs, as with most other forms of trading, are largely affected by macroeconomic factors, so understanding how to place your stop loss will go a long way to helping you with your profits. 

CFD trading is not suitable for everyone and, so, those who are not willing to put in the time and effort to learn the intricacies of CFD trading may find it a difficult process to get started with. However, if you are up to the task, there is no reason why you can not make a living from CFDs.