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Updated on: 16 April 2018

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Starting from scratch

The trading environment has no mercy and it allows no weaknesses. I had to start with this brutal statement, because there are too many of you out there who have fallen prey to the myriad of misconceptions linked to the business. The trading industry will eat you whole as soon as you step foot in the warzone, which is why it is essential to possess a well-defined set of rules and tips to help you navigate the dangerous wasteland.

As a general rule, pros don’t usually need as many advices. Because they are pros. This means today we will be focusing on breaking down the basic CFD trading tips everybody needs to know, whether beginners or pros. Some of them might seem like common sense, but I know from experience that common sense is not as common among general population, as one might think.

And, because I wanted to be exhaustive with this article, I will break down all the key trading strategies you should use as a novice trader and I will separate them into 2 distinct sections:

  • 1. Basic trading strategies
  • 2. Personal development

And, exactly as you might expect, we will start with point 1.

Basic trading strategies

I have chosen not to focus on the more advanced techniques but, instead, go through some of the more basic ones, as those serve as the foundation for the rest. Also, it is important to remember that the more advanced trading strategies tend to change as time goes by, whereas the foundation will always remain the same.

With this being said:

1. Choose the right broker

I know, this is a pretty vague statement. But, here is what I mean by that. The right broker needs to have several strict advantages:

  • Needs to be regulated
  • Needs to have a low minimum deposit requirement (usually $100 or $200)
  • A solid trading background, with plenty of user positive feedback
  • Optimized, diverse, highly responsive and user-friendly platforms
  • Low commissions and fees
  • Strong and complex educational sections and so on

Sure, you can find other aspects aside from these, but what I am saying is that you need to put things in balance and make an informed decision. It will ultimately influence your evolution as a successful-to-be trader.

2. Familiarize yourself with the market

It doesn’t really matter what CFD market you choose to dive in. There is this misconception that some markets are riskier and harder to accommodate than others, which is just that – a misconception. In reality, it all matters how prepared you are and how consistent with accumulating knowledge.

This is why, after choosing your preferred market, you need to familiarize yourself with all of its intricacies even before placing the first bet.

3. Protect your capital

This could mean a lot of things, so let me detail them one by one:

Segregate your money – Fuel your trading account only with the amount you are ready to invest, nothing more. If you want more, add more when needed, but never put all your money in the trading account at once. They will represent a legitimate investment temptation and you need to stay away from temptations.

Watch for the leverage – This is tricky but, in essence, it refers to the fact that you need to realize that multiplied gains also imply multiplied losses, if the leverage works against you. So, never take leverage for granted.

Never trade more than you are willing to lose – You need to know at all times what you are acceptant of losing. Sometimes, with CFD trading, losses can outweigh your current account balance, so make sure you are fully aware of the risks before taking on any trade.

Go for low investments, regardless of how much you are willing to lose – It doesn’t matter if you have $5,000 or $500,000 at your disposal. Investing low amounts especially in the first phases of your apprenticeship is always a smart move. Keep that in mind.

4. Go for risk management strategies

Risk management is the bread and butter of the CFD trading market and of the trading business in general. It matters less how much money you are making and more how much you are losing. Professional players always keep strong risk management trading strategies in place to prevent and cut on the losses as much as possible.

Only then can you safely focus on making profit.

5. Always take educated risks

Taking risks is incredibly rewarding when you know how the game works. As long as you are consistent with accumulating knowledge, you know how the market moves and where it is more likely for an asset to go, taking risks is the name of the game.

This is how you build fortunes. But, always keep in mind, it is crucial to know what to expect and have a backup plan in case things go haywire.

These are, in my professional opinion, some of the most rewarding CFD trading strategies you can use. They represent the basis of succeeding in the industry. But, as expected, these are only partially effective, as long as you don’t work in personal development.

Which brings us to the next point.

Personal development

This part right here involves all the personal aspects you need to be working on in order to both increase your efficiency as a trader and evolve in the right direction on the long run.
This means you need to:

1. Abstain from becoming too greedy

The Land of Greed is where capital goes to die. The greedier you are, the more likely it is for you to ignore the risks associated with the CFD trading business. And there are quite a lot to keep an eye on.

If you are already a greedy person, discipline yourself and start now.

2. Never lose your head

This will lead to overtrading and overinvesting – 2 of the most dangerous financial conditions of an undisciplined trader. Overtrading is a health hazard. No matter what the situation is, it is always better to cut losses, or secure your profits, than to risk falling too deep into the rabbit hole.

3. Be consistent

If you already have a winning strategy that works, stick to it. No need to change anything if it all goes according to plan. Also, try adopting a specific pattern, including specific trading strategies, capital and risk management, along with anything else that could form your trading profile as a whole.

4. Always try to improve yourself

“Personal development”, remember? What this means is that you need to become aware of what keeps you back from becoming the best trader you can be. Be it your character or your personal habits, everything that could hold you from succeeding in the trading industry must go.

Always improve yourself in every way possible.

As you can see, there is no straight line to success and even the most tested and effective trading tips and strategies can prove powerless if you fail in the personal development sector. My advice is to take measures, steady steps towards success, instead of reckless, hurried ones.

Take your time and overanalyze every aspect, no matter how petty it might seem. This is the key to evolving both as a trader and as a human being.

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