CFD trading is a popular trade today, and it’s no surprise why tons of people invest in this trade, whether they’re novices or experienced traders. But one thing this trade shares with other markets is its volatility.
This trade can be complex and is usually taken on by more experienced traders. And when it’s peak season, you can expect traders to either make it or break it in this trade. Since 2024 is coming up, it’s best to welcome the new year prepared and ready!
So to help you out with that, and make you one of those traders who do make it in 2024, below is a list of CFD survival tips to consider:
- For starting traders – Use demo accounts first
If you’re new to trade, especially CFD trading, consider practising with demo accounts first. Tons of trading platforms offer demo accounts that allow you to train with trading tools and give you a feel of what it’s actually like to trade in reality (But of course without risking any money).
It is a good idea to try it with an actual quantity that you would be prepared to trade. You’ll see more accurate performance and returns in this approach, which might be positive and negative.
- Think about using stop-loss orders
When trading, always be open to extra help. A little hand such as placing a stop-loss order can be very beneficial for you. What a stop-loss order does is it minimizes your losses by automatically closing a position once you’ve reached an amount you’ve set for the order.
To help you better understand how the stop-loss order works, here is an example:
For instance, you determine that you cannot bear to lose more than $25 after purchasing an asset for $100. Put the stop-loss at $75 in this scenario, and if the price eventually drops below $75, you may close the trade and only lose $25.
- For starting traders – Do your homework!
Before getting into any trade, make sure to do your homework. This is an essential step most traders today overlook. This is the reason why so many traders today lose so much money and eventually stop trading.
Remember, in trade knowledge is one of your best friends. It’s kind of like the ammo you have before heading off to war. So make sure you’re loaded to make better trading decisions, not get scammed in trades and so much more.
Consider learning the fundamentals of a market, knowing basic terms, how to use tools, how to read charts, know standard fees and rates and so much more. Knowing all these things first can make trading all the easier and less taxing.
- Use the right trade position
Sometimes brokerage platforms will not allow you to manually change the leverage settings. Which means you won’t have as much control over this part of your transactions. In the event that you run across such restrictions, you will need to look into other approaches, including cutting your trading position, in order to properly manage risk.
That being said, it is crucial to always be mindful of the risks you continue to face, no matter what. Being vigilant not only guarantees that you have a solid understanding of your financial exposure but also gives you the ability to make wise decisions that protect your trading and investing endeavours in the unstable financial environment.
- Think about limiting your leverage
Leverage is an option, but keep in mind that it is rarely feasible to expect the market to shift in the direction you want right away after you begin a trade. If leverage is high, even a minor move (say 0.1%) against you might compel you to exit the trade and prevent you from making money even if the price moves back and begins to move in the “right” direction.
Survive the CFD Market this 2024!
Now you know 5 great tips about CFD trading, this will be enough to help you survive the market this upcoming 2024! But remember, consider and take each item into deep consideration and try to apply them when trading. Each of these steps branches out into many factors that can affect your trading, so please don’t overlook these 5 tips. So become the best trader you can be this 2024 by following these 5 tips and keep trying to be the best you can by being “teachable” at all costs.