When you start with CFD trading, there are some key things to consider. One of them being you get plenty of practice – which is why GCC Investing offers a demo account for training.
Another is to learn from the mistakes of others and here is some top trading advice to help you start your trading career successfully.
Benefits of CFD trading.
Contract for difference, or CFD trading, is where you can make a profit from both rising and falling markets. You don’t have to own the stocks, commodities or currency that you trade with; you merely create an agreement with the seller to exchange the difference between opening and closing prices. Hence contract for difference. The trader aims to predict what an asset will do. The term ‘go long’ is used if they think the price will rise while ‘go short’ means they think it will fall.
Tips for CFD trading.
There are lots of tips for CFD trading, and each trader will have accumulated a stock of their own tips and advice during their trading career. But, the essential basics need to be learned as soon as possible.
Learning to control leverage is one of the things you should practice with your demo account. CFD trading is a leveraged product, and you need to manage it. It means you only need to take a small percentage of the total trade value to open a position. A typical leverage might be 10:1 – this means only 10% is required to make the trade. By keeping control of your leverage, you can make more substantial gains from small capital amounts. Or limit the losses if the trade is not in your favour.
Make use of stop losses.
Another important tip is to make use of stop losses. These are an excellent way to control leverage and need to be used wisely. If you don’t use stop losses, then you could face a position where you lose all your investment. But, if it is too tight, then you will find it hard to make any money. The trick is to learn to set enough of a gap for markets to increase and decrease and use strategies to avoid losing too much.
Have clear goals.
Setting realistic goals is a big part of any money-making enterprise and trading is no different. The most successful CFD traders are those who create a goal and work towards it. It might be a certain amount of money they want to make each week. Or it might be not making a loss for the first so many months. A realistic goal gives you something to work towards and a base to improve your position as you learn more.
The importance of learning.
While there are lots of top tips like the three above, that can help you develop your trading career, another vital element of being a successful trader is to learn. Read a lot, sign up for news alerts on your chosen market, follow top finance bloggers and traders online. And, make use of the facilities on sites like GCC Investing where you can create a demo account.
Demo accounts are the best way to learn about CFD trading without risking real money. Here you can practice your stop losses, learn about leverage and decide on the kind of goals you want to set. You can find what kind of assets you want to trade with and understand how they work. Then when you are ready, it is easy to switch to a full account and start applying all that learning to real live trading.