If you’re new to CFD trading or have been in the game for a while but feel like there’s still something you’re missing out on, then this article is for you. These 7 tips will get you one step ahead of the game and towards that longed-for trading success.
Set realistic, clearly defined goals
This is a staple rule in any venture you get yourself into—be it in or beyond the trading world. Realistic and clearly defined trading goals will help you keep your account intact and save you from frustrations of not being able to achieve too ambitious goals. It will also help keep you in the game and eventually make a living out of trading financial instruments.
Here’s a simple goal-making process:
- Know what you want
- Aim at it every day
- Eliminate all distractions that are keeping you from your goals
- Focus, focus, focus
In CFD trading, there are many places you can end up in. To have greater chances of ending up where you want to be, map a clear path towards it and work on it daily.
Make sure you have an edge
In order to survive and be ahead of the game, you need to have an edge with your trading or a positive expectancy system. Professionals are always out to strip you of money, so you must always be confident, disciplined, and diligent about your trading edge.
Your trading edge can be your:
- money management rules
- ability to execute your entry techniques to perfection
- ability to stay patient as you wait for better opportunities
- skills at trading news and reacting promptly during news events such as non-farm payrolls
- skills at making minimal or no mistakes
- skills at maximizing a profitable trade
These are just starting points. Focus on improving your strengths and minimizing your weaknesses, and never underestimate your skillset. By maintaining your edge, you can continuously improve your financial status as well.
Create a well-defined trading plan
A sensible CFD trading plan should include the following:
- Your trade-by-trade and long-term trading goals
- Your entry strategy and trade identification system
- Your money management strategies
- Your in-profit and/or initial stop loss
- Your record-keeping strategy for keeping trading statistics up-to-date
- Your target markets and trading styles
A trading plan should help you stay calm and rational during heat-of-the-moment situations. It will also help you stay confident when you’ve had a few consecutive losses because you know you still have your edge.
Keep a trading journal
A CFD trading journal is a useful tool for keeping records of your entry and exit points, the reasons behind those entries and exits, and the lessons that come with the experience.
Here are some important pieces of information you should keep a record of:
- The instruments you traded
- The time you entered and exited the trade
- Reasons why you traded – fundamental, technical, etc.
- Was the trade a loss or a profit?
- Any lessons learned on the overall trade management
- Any other observations or feelings about the trade
Keeping a record of all your trades will help you see your weaknesses and strengths as a trader, so you know what to focus on. Looking back on your past strategies and thoughts, you will see certain patterns that will help you recover and make rooms for improvements.
Diversification is the key to minimizing risks, as attested by the most successful traders in the world. This pertains not only to diversity across financial instruments but across markets as well, which proves to be more essential. CFDs are extremely beneficial trading tools, but you need to learn how to use them sensibly, logically, and cautiously in order to make profits out of it.
Check your emotions
Never take anything personally. If you experience some losses in a row, that doesn’t mean the market is against you or you have lost your touch and should just give it all up. You simply need to review your established plans against your current performance.
Letting your emotions affect you and your decisions is a major obstacle towards successful execution of your trading plans. When the market throws up surprises, stay disciplined and keep your emotions checked. Losses are an inevitable part of the trading process so be patient and just keep moving forward.
Maintain a positive mindset
Loosen up. Trading shouldn’t be treated as a life or death situation. Take some time off and use some positive affirmations daily to maintain a positive outlook. If you’ve done your work to create a trading edge and took your time to learn all the essentials of successful CFD trading, then you’re giving yourself great chances to achieve a series of profitable trades.
If you’ve made mistakes, learn from them and move forward with a more determined attitude. There is no best time to change but today. Best of luck!