CFD Trading Strategies

Having clear trading goals and techniques will help you to minimise risk, enter and exit trades at optimal times and minimise uncertainty in your decisions. It’s important to ask yourself the following questions and define the answers before entering your trades:

  • What type of trader am I?
  • Are you more of a day trader or a swing trader? The former will typically close out trades before the end of each day, while the latter may keep trades open for days, weeks or longer. It’s important to find out which style works best for your own lifestyle and occupation.
  • Why am I trading?
  • Those who are aiming to build up a trading career will have different strategies to those who have an interest in trading part time. Understanding how much you want to grow your portfolio - and how soon - will help you to put suitable methodologies in place.
  • Will I trade long or short?
  • If you expect a price to increase, you will want to take a long position or open your trade using a ‘buy’ order with the plan to close it with a ‘sell’ order. If you expect the value to decrease, you’ll want to take a short position or open your trade with a ‘sell’ order with the aim to close it out with a ‘buy’ order.
  • When should I enter and exit the trade?
  • You can use a range of fundamental and technical analysis and tools to decide when it’s best to enter and exit your CFD trades. These may include support and resistance levels, moving averages, oscillators and economic data releases that could help you to understand the market’s movements.
  • How will I manage risk?
  • An important part of any CFD trade is minimising your risk should the price go in the opposite direction than you anticipated. Risk management strategies include limiting your leverage and trade size, diversifying your trades and putting stop loss orders and/or take profit orders in place.

Effective trading strategies will help you to become consistently profitable in your trades. Be sure to work with your account manager to develop your strategies and be able to make trades with confidence.