July 4, 2022

Tips and strategies of CFD trading to survive in the market

CFD – Contract for differences has gained popularity as a less capital-intensive way of trading as you don’t have to buy an asset at its face value. However, CFDs have possibilities of rewarding and risky at the same time. You can win on CFD trading if you follow basic tips and strategies while trading. Similarly, you can fall if you don’t pay attention to these tips. Many of these suggestions might be just common sense to you, but we often find traders neglecting them. 

Follow these tips and strategies to survive in CFD trading: 

If you’re a beginner, use a demo account: Before jumping straight into the world of trading, It’s better to take a life experience first. You can begin your CFD trading SA by test demo accounts, research, or take the help of the best CFD trader in south Africa for tips. It’s a good idea to start with a limited account. Directly jumping in with a high amount can burn a hole in your pocket. Enter with a demo account and see if you like the outcome. This way, you’ll see performances and returns. 

Practice: Using a demo account for some time can be boring, but real lessons are more valuable than knowledge. The more you become accustomed to real trading in your demo account, the more you will feel confident about your strategies with real cash. Beginners are often stuck up in emotions; more practice will develop your decision-making, leaving behind emotion intervention. Your mind will be more focused and consistent to gain profits. 

Cut out early losses: Losses drain your resources; the more time you take to cut your losses, the more it will stress your resources. Cut your losses as soon as they occur to gain more chances of making overall profits. It’s a game of spontaneity and aggregate; negative sides are as important as positive. If you take an hour extra to sell your position, chances are you will make a 5% extra loss. Wouldn’t it be better to save yourself from additional loss? That’s why selling your position during loss as early as possible is essential. The best CFD trader in South Africa can help you sell off positions early. 

Use breakout and Contrarian strategy: These are the two most popular strategies you need to try; In breakout strategy, Your basic task is to perform analysis to find out the resistance level and support of assets. They are called breakout levels, And when prices move through these levels, that’s your time to look for trade. On the other hand, in contrarian strategy, timing plays a crucial role. Watch out for a list of trending assets and analyze when a trend is coming to an end or reach its ending point; use Elliott Wave theory to implement the time strategy. 

Choose a reliable broker: Having the best CFD trader in South Africa can make a difference in your trading outcomes. Trading fees can eat up a lot of your profits. Find a trader that can determine your profit and don’t eat out your profits in trading fees. Choose them wisely to avoid scams. 

Set realistic profit expectations: Often, traders find themselves in losses due to their unrealistic profit expectations. Trading is complex; it’s not always bright; there can be days of the dark as well. Most traders invest in the market and expect profit every time, but unfortunately, that doesn’t happen; if you can’t bear what you invest, you won’t survive. It doesn’t matter if you gained a huge profit from one asset. It’s not going to be the same for every asset you invest in. Therefore, invest but plan out a rough estimate of realistic profit as well as loss. 

Stop overtrading: Overtrading refers to investing too much of your capital at one time. Being exposed to one position increases your chances of more liabilities. However, when you have multiple positions, it’s better not to spread your capital thinly. Find different trading opportunities and do your research. 

Create and implement: Don’t go trading blindly; plan your strategy for each trade before trading. It’s better to consider your closing position in advance in best and worst-case scenarios. Think about what will happen when profit goes up or falls by 5%, 10%, or more. These estimates will give you an idea of how big a loss you will be able to tolerate. 

Bottom line: These tips and strategies might sound basic and simple to you, but they are not easy to implement if you don’t follow consistency, discipline, and have patience.

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