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How to prepare and profit from CFD trading

by , 15 May 2015

Trading contracts for difference (CFDs) gives you an opportunity to profit from the ups and down of shares and indices.

But before you begin trading, you need to ensure you're ready. And once you start trading, you need to keep some key things in mind.

Read on to uncover the top tips to keep you right when you trade CFDs…


Before you trade CFDs, make sure you tick these boxes…


The lure of profits from trading CFDs can make you eager to begin. But before you do, make sure you…

Understand CFD trading
You need to have a thorough understanding of how CFD trading works. This includes the costs involved and, most importantly, the risks involved.

If you’re uncertain about anything to do with CFD trading, make sure you ask questions before you begin.

Have a trading strategy
Make sure you have a trading strategy to use. You can’t put trades on based on a whim and hunch. Your trading strategy should include entry and exit levels.

Make use of demo accounts online to practice your strategy before you put money to work on the market.

Prepare for the emotional journey
Trading brings out emotions such as fear and greed. The best way to combat these is to stick with your strategy. Don’t let your gut overrule what your strategy dictates.


Here’s what to do once you start trading CFDs


Once you start trading, don’t forget to…

  • Start out small. Stick with position sizing to ensure you’re not risking too much on each trade. For example, only risk 2% of your trading capital on each trade.
  • Cut your losses, after all you can’t be right with every trade you make. And never move your stop loss unless it’s to preserve profits.
  • Learn from your mistakes and don’t try to make up for losses. It’s all part of your trading learning curve.
  • Only trade with money you can afford to lose.
  • Double and triple check your trades before putting them on.

So there you have it. How to prepare and profit from CFD trading.

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How to prepare and profit from CFD trading
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