How To Be Successful With CFDs


It is a known fact that there is money to be made in CFDs but when it comes to the success ratios, not many are able to make it big.

So the question which comes to our mind is whether there is something wrong with CFDs as a derivative or is it about not being aware of the success mantra.

The latter is well and truly the fact. Though many people consider CFD to be a betting game, there is less of betting and more of strategizing and planning. Traders entering into CFDs fail to plan instead of planning to fail.

Hence we will have a look at the various points to be kept in mind as far as CFD is concerned. It will certainly help to look at contract for differences from a different perspective and it is also likely that the percentage of people who make it big will also increase.

There is no magic wand and success in CFD does not come overnight.


#1 Look For Profit Increase Rather Than Minimizing Losses

Many traders often make the mistake of clinging on to loss making deals rather than understanding the importance of coming out short.

Hanging on to loss making deals hoping that things will turn around will remove focus from the various profitable deals which could be waiting you on a daily basis.

Hence learning when to go short and when to go long is perhaps one of the most important attributes when it comes to making money on CFDs. A look at some reputed sites like CMC Markets will certainly corroborate this fact.


#2 Go By Logic And Not By Gut Feeling Of Emotion

There is no place for emotions and gut feelings in any financial dealings and CFDs are also no exception.

Though there might be sporadic wins here and there and a few of them could also be big. There is no doubt that when it comes to being there long time, one has to be very calculative.

The decision to invest or stay out should be based on facts, information and not by what the heart says.


#3 Spread Risk Across Many Trades

Another common mistake that many of us make is to try and go for the kill in just one trading session or a single trade.

This is a grave mistake which you will be making if you choose this route. You must not kill the goose which lays the golden eggs.

Anything in excess of 40 to 50% of exposure in a single trading session would be too risky and should be avoided at all points of time.


#4 Have A Good Mix Of Technical And Fundamental Analysis

Traders who believe and practice a combination of both fundamental and technical analysis will most certainly have a much better track record when compared to others.

Fundamental analysis could be useful to trigger a particular trade and analyzing it technically could be helpful in making the entry at the right time. It is important to have a perfect balance of the two and this comes with experience and expertise.


#5 Understanding The Importance Of Timing

Entering too early or too late could make all the difference between winning and losing. It is all about waiting for the correct trigger and taking action immediately.

The trigger will happen only when you have a basic understanding of the fundamentals and combing them properly with technical analysis.


#6 Keep Losing Trades As Few As Possible

A good trader is one who is able to distinguish between trending and range bound markets. This again will come with experience and it is important to learn this as early as possible.

Without this it is likely that traders will cling on to a number of losing trades hoping that things will turn around.

Over a period of time they will be saddled with a number of loss making trades and you will get caught in this whirlpool.


#7 Understand Your Weaknesses And Strengths

There is a lot of psyche involved when it comes to being successful in CFD trading.

Each and every trader has some weak links and successful ones are those who are able to find out ways and means by which they are able to convert their weaknesses into strengths.

Being informed and knowledgeable could make all the difference.

Are you trading CFD’s?  Share your thoughts and comments below.

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