So you are ready to trade forex with CFDs to make money. It is a wise choice because CFD is an instrument that enables even small investors to trade markets like the Forex market and the stock market without having much capital.
If you are considering this type of investment, please read on.
This article will not give you much information about how to trade, but we will share with you some common sense and basic knowledge that should help people who are new to the world of CFD trading.
Don’t expect overnight success
If someone has told you they made a fortune overnight by using this or that “miracle” system or by following this or that guru, chances are they are not telling the truth.
Some people might get lucky and earn some money quickly, but in most cases, it takes time for people to learn how to become profitable traders.
Stick with your plan and keep learning.
Make a plan
Maybe you have heard about SMART goals. SMART stands for specific, measurable, achievable, relevant, time-related.
It applies to almost everything you do in life. For example, if you make a goal of losing weight after Christmas, it is not smart because it is not specific enough – how much weight do you want to lose?
The same goes for trading financial instruments like CFDs. It would be best to have a plan with clear goals and objectives for every trade you open.
If you have a trading system, it is even more critical to have a written plan of how your strategy works and the advisable stop loss level for this or that instrument, etc.
Don’t overtrade
“I lost money on that trade, but I’m going to make it back and then some more by taking this other trade.”
Stop.
Don’t enter the second trade before you get your money back from the first one. It is better to stay out of the market than to have your emotions affect your trading decisions.
Keep a trading journal
Write what you do, why you make every trade and what the results are. It will help you understand your behaviour better and learn from your mistakes.
Stick with it
Learning how to become profitable in CFD trading is a process that requires patience, time and discipline. If you didn’t lose money on your first few trades, then you are doing something right.
Just keep learning and working on your system until it works for you.
Don’t get carried away by greed
If you want to open a trade because “it looks so good”, – find some other way of justifying taking the trade than just opening it because you think it will make you rich soon.
Your first loss is not a reflection of your trading skills
Everybody has to learn, and it may take some time for you to find out what works best for you. Keep going with your plan, and don’t despair!
Practice
There is no such thing as a successful trader who has never lost money. Learn from your mistakes and practise your skill before you make money consistently.
Don’t be afraid of losing, be afraid of missing opportunities
It’s easy to say, but it’s not always easy to follow this rule in practice. You are afraid of losing your money, sometimes – afraid of missing an incredible opportunity.
But being 100% right while closing every trade that doesn’t work out guarantees that you will make no money in trading!
Don’t argue with the market
It’s OK to have different opinions, but it is not OK to argue with the market. If you trade with a system that works, then it doesn’t matter if you are right or wrong – the numbers will eventually come to where they should be, and your trading account will show a profit!
You can go broke in an instant
Forex is deceptively simple, which means it is easy to start, but it is almost impossible to know everything about the market – just as with any other topic.
You can open a trade and then have your trading account be down by 50% in seconds! The good news is that you can recoup those losses as well.
Just follow your rules and stay disciplined. For more info, read educational articles on trusted brokerage sites.