On the surface CFD trading often appears to be deceptively simple seeing as all you need to do is predict whether the price of a stock is going to increase or decrease. When you actually start to trade however you’ll soon see that although CFDs themselves are easy to understand – it can be tricky to be successful when trading them.
Assuming you want to learn how to successfully trade CFDs and make a profit – there are 3 crucial tips that you need to follow:
Always preserve your capital
While this may seem like common sense, the truth is the biggest mistake most beginners make is failing to preserve their capital. In particular that tends to happen when you take on a losing position and then are tempted to ‘ride it out’ in the hope that things will improve.
The problem with riding out losing positions is that as your capital begins to bleed away the difficulty in recovering that capital increases exponentially. That is why it is always better to cut your losses sooner rather than later – and use CFD stops so that you never end up losing too much of your capital in the first place.