Our CFD Trading Tips & Tricks for a Higher Hit Rate
We’ve got trading tips and tricks that will give you a higher hit rate. These tips are designed to work in any market condition. They’re not just for the big swings; our CFD Trading Tips & Tricks can help you get into the swing of things every day. Get ahead of the game by learning from our experience (and mistakes). Let our trading knowledge guide you towards success.
CFD trading can be an extremely profitable endeavor for traders. However, if you’re a newbie you might want to use some CFD trading tips to help you get started faster. If you want to increase your trading profits, then our CFD trading tips and tricks will help you achieve that.
Table of Content
1. Educate yourself
Contracts for Difference (CFDs) are traded instruments where an investor buys or sells shares without owning them. They are similar to futures but differ in several ways. For example, they don’t require delivery of physical products and can be used by professional investors. From experience, we believe traders should always be aware of opportunities and try different strategies. In addition, we highly recommend traders educate themselves accordingly.
It is a derivative instrument that allows you to speculate on various global markets such as currencies, commodities, indexes, and shares without owning the underlying asset. Not owning an underlying asset means speculating on rising and falling markets, going short (sell) if you believe the price will fall and long (purchase) if you believe the price will climb.
CFDs are a leveraged instrument, which means you can acquire access to a position by making a small deposit called a margin. Remember that when trading on leverage, you can magnify earnings and losses. Brokers calculate your profit and loss based on the total amount of your position.
Plus500 is a trusted global brand that offers an easy-to-use trading platform for online traders, alongside access to share trading, crypto and a thorough selection of CFDs.
79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
You can also choose to open a demo trading platform so that you can practice trading with a certain strategy or process. A demo account also allows you to practice trading without risking any real money.
2. Find A Strategy that Suits You and Stick to It
To develop a successful trading strategy, you must first identify your trading profile. Consider your financial knowledge, trading funds, time frame, risk tolerance, and financial goals. Once you’ve answered all these questions, then you can fine-tune your decision-making process.
Traders using CFDs may use them to hedge their investments, limit the damage from volatility, or be comfortable with only one or few trading strategies.
Investors’ unique circumstances and strategy determine their reactions to potential fluctuations. For example, some investors may choose to hedge against volatility by selling puts (shorting) shares of the company they own.
An investor can also use a news strategy, which involves following a comprehensive economic and financial schedule. By doing so, an investor will be able to know when certain events occur and how they may impact the price of the underlying asset (e.g., stock).
It’s important to stay up-to-date even if you’ve set a stop loss. Doing so will allow you to spot potential issues before they become major problems.
3. Be Aware of Your Positions
As a trader, it’s important to keep track of your open positions and consider their size and leverage.
You must ensure that you have enough money in your account to cover the entire maintenance margin for your position. If your account falls short of the minimum level of funds, you will be placed under margin call, which may result in the closing of your position if you don’t top up your account.
There are generally two ways to limit the risk of a close-out on your account. You can either top up your account to cover your margin requirements or close some open positions to free up new funds for trading.
We hope that these insights will help you become a better trader. Remember, however, that regardless of your past experiences, day trading is difficult to master. Keep practicing your trading skills and strategy and test them out for reliability and profitability.
4. Use a Demo Account
It is always best to have some practice before you start anything. And this is especially true if you are planning to trade CFDs. Start trading CFDs with a demo account first, since there is money involved.
The good thing about working with a demo account is that it allows you to try things out before putting them into production. However, if something doesn’t work, you can simply delete it without any loss.
Most online brokers offer a demo account. So, no matter which one you sign up with, you will have the option to use a demo account first. This is great for beginner CFD traders since you might not have the winning strategy nailed down just yet.
Just because you know you are using a demo account, do not trade recklessly, though. You need to treat it as if it were your real account. And just as if you were trading actual money. This will make it easier for you to learn how to avoid mistakes and get better results.
If you have $2000 to trade, then you should place exactly $2000 as your virtual amount into the account. Then do everything that you would do if you had $2000 to trade. Otherwise, there is no point in having a demo account.
5. Patience Is a Virtue
You may have heard people say this a lot in many different contexts. It is still true today when it comes to CFDs trading. Don’t think of CFD trading as an easy way to make money. It is not. But if you do your research and work hard enough, then you can earn good profits.
While there are many inspirational stories about people earning millions from CFD trading (and I’m one of them), they didn’t do it overnight. And guess what? Nothing is stopping you from making millions from CFD trading, either. You just need to be patient.
When you’re impatient, you may make hasty moves. But if you do so, you could lose your shirt. Some investors have large gains, only to have many losses that wipe them out. Don’t let that happen to you. Keep an eye on your winning percentage. A good rule of thumb is to aim for a 60% win rate.
Kill losses early in your trades. But also, wait patiently for major trends. You should also try to avoid trading during the day. Essentially, you are waiting for an opportune moment to make a large trade.
If you’re not already an active user in the market, you may want to consider using a demo account. We discussed this in our last tip.
6. Keep an Eye on Trends
You should know that knowledge is essential. A general idea of what is going on will always help you craft a winning strategy. Trends are crucial too! The idea is always to try and tip the odds in your favor.
And you can do this by following trends. Always watch out for what’s happening in the marketplace. Keep your eyes open for any signs that might indicate a trend. At that point you’ll have momentum, which is always good!
When trading range-bound assets (such as stocks), it can be a risky strategy. You might want to consider waiting for a breakout instead. Always investigate the trends and be patient with them.
7. Never Get Emotionally Attached
This is one of our most important CFD trading tips. It might be most true for beginner traders. You should not get emotionally involved in any trade. Your emotions could cause you to make bad decisions. Also, if you cannot see the bigger picture because of emotional attachment, then you may miss out on opportunities.
You may find yourself falling face-first if you get too emotionally involved with your positions. Leveraging can be very cruel. Don’t ever get attached to one company or trade.
Don’t make the mistake of thinking that the market will balance out. One day, one company may be at the top. Another day, another company may be at the top. You could be lucky enough to get back into the game. But if you do, don’t think you’re safe. You’ll probably find yourself right back where you started.
You need to be dynamic when it comes to trading. That is why not getting emotionally attached is one of the most important tips we can give traders. No matter whether you are a beginner or a veteran. Although, if you are a veteran, you probably know why not to get emotionally attached by now.
Feel empowered to make a loss. Learn when to pull back and accept a loss before sinking further into debt. You should be able to make money on both the highs and lows. Being flexible with your trades and not being attached will help you do so.
8. Starting Small Is Always a Good Idea
You’ve probably heard the story about how Apple started out in Steve Jobs’ garage. But think about it differently. Every Fortune 500 company you know, and every trillion-dollar company you know, started small and most often as a simple yet bright idea.
The same is true of your CFD trading journey – start small. This will ensure that you do not bite off too much too soon. As you gain more knowledge and experience, you can then branch into new areas.
Starting out small can be an effective method of learning how to trade. However, if you’re just getting started, you should start off with a very limited amount of money. You’ll learn faster if your losses aren’t too big.
With some time, you will have a robust strategy set and get to know the market much better. So, starting small initially is the optimal move. Look at all the markets. Then see which one interests you the most. Also, which one do you have the most knowledge about?
Once you’ve become more familiar with the market, you can start to diversify your portfolio by investing in different types of assets. You’ll feel more confident when trading because you know your strategy better now.
Award-Winning Trading Brokers:
Rating:
Regulated By:
FCA, CySEC, ASIC, FMA, FSA, FSCA
CySEC (EU), FCA (UK), ASIC (Australia)
BaFin, FCA
Demo Account:
✔ Free
✔ Free
✔ Free
Live Account:
$100
$200
0
Spreads From:
Variable from 0.5 bps
Variable from 1.0 bps in EUR/USD
Variable from 0.4 bps
Selection Of Instruments:
2000+
1000+
17.000+ (FX, Stocks, CFDs, Commodities and more)
Support:
24/7
24/7
24/7
Payout:
1 – 3 Days
1 – 3 Days
1 – 3 Days
79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
RATING:
REGULATED BY:
FCA, CySEC, ASIC, FMA, FSA, FSCA
CySEC (EU), FCA (UK), ASIC (Australia)
BaFin, FCA
SPREADS FROM:
Variable from 0.5 bps
Variable from 1.0 bps in EUR/USD
Variable from 0.4 bps
SELECTION OF INSTRUMENTS:
2000+
1000+
17.000+ (FX, Stocks, CFDs, Commodities and more)
9. Losses Are Part of The Game
Here is a hard fact. Whether you are a newbie trader or an experienced one, you will encounter loses from time to time. This is normal. However, what distinguishes a good trader from a bad one is the ability to accept a loss and move on.
You should never add something to a losing position. This will only make things worse. When you are certain that a trade is no longer worthwhile, cut your losses and move on. Don’t let a bad trade drag you down.
You might want to deviate from your strategy because you think that maybe you’ll save some trades by doing so. However, if you do that, then you’re likely going to lose out in the end. So, the best thing to do is to stick to your strategy no matter what happens.
Think about it this way, you have built up your strategy over time. With experience and time, you know what works best and doesn’t. There will be times when things do not go according to plan. Embrace the reality and stay focused on what works.
10. Do Not Gamble Away Your Capital
When you are trading forex, you are investing. You should not think of it as gambling. Forex trading involves risk. However, if you know what you are doing, then you can minimize your losses. Do not let yourself get carried away by emotions. Think rationally.
In CFD trading, traders can trade without knowing what happens next. They just know why they’re doing something. They’ve got the right reasons to do it. And they know the markets. Some may get lucky if they gamble. But, they aren’t gambling away their money.
And you shouldn’t, either. Don’t invest in a trade just based on how you feel about it. Justify your moves. That’s why a strategy exists in order to do so. Take a look at the data and find out what works and what doesn’t work.
You can forecast specific outcomes in CFD trading using the right metrics and a good strategy set. Gambling with your capital is too high of a risk. It is just not worth it.
11. Avoid Overtrading
In basic terms, overtrading is when you have a large amount of money invested at one time. By doing this you are essentially opening yourself to several risks. And that is a bad thing. But that does not necessarily mean you should not look into different investment opportunities.
It’s never a bad idea to diversify your investments. However, you don’t want to spread yourself too thinly.
12. There Will Be Bad Days, Prepare for It
It is always a good idea to have some backup. Always be prepared for anything. Even if things don’t go in your favor, having enough equity in your account can help you in other ways too.
Sometimes you might need to put up additional margins. And some brokers will not even issue margin calls. In this case, they will just liquidate some of your positions. Of course, given that you fell below the requirements of the margin.
So, trying to avoid it when you can is a good idea. That’s why having extra cash or stock in your account is always an excellent idea. It can help handle any unexpected events.
Award-Winning Trading Courses:
Asia Forex Mentor
Investors Underground
Bulls on WallStreet
Rating:
Founder:
Ezekiel Chew is the founder of this course. He is a well-known trader and successful businessman.
Nathan Michaud is the one who started this platform. He is a famous stock market trader.
Kunal Desai launched this course. He is an American stock market trader and cryptocurrency investor.
Ideal For:
This course is best for learning day trading.
IU is the best for learning about the stock market.
Bulls on WallStreet is the most satisfactory course to learn trading through live sessions.
Course Material
They have recorded video tutorials with proper explanations of the strategies and techniques that the mentor has used himself.
Provides videos on the basics of trading and advanced education. You also get access to one of the giant chatrooms for traders.
Gives live classes, quizzes, feedback, and an online trading simulator.
Cost:
The standard price for learning on this platform is $997 .
At around $2,700, you will get an annual membership and common course material.
The approximate cost is $1,500 for annual enrollment in the course.
FOUNDER:
Ezekiel Chew is the founder of this course. He is a well-known trader and successful businessman.
Nathan Michaud is the one who started this platform. He is a famous stock market trader.
Kunal Desai launched this course. He is an American stock market trader and cryptocurrency investor.
COURSE MATERIAL:
They have recorded video tutorials with proper explanations of the strategies and techniques that the mentor has used himself.
Provides videos on the basics of trading and advanced education. You also get access to one of the giant chatrooms for traders.
Gives live classes, quizzes, feedback, and an online trading simulator.
13. Always Diversify
With CFD trading, you won’t ever feel like there is a shortage of opportunities. You’ll have plenty of markets and assets to choose from. Choose those in which you have an interest and enough knowledge.
It’s also a good idea to diversify your portfolio. Diversifying reduces risk and increases returns. For instance, if you’re investing in technology stocks, consider buying gold and silver too.
And you invest in only technology stocks. What happens if you’re wrong? You basically put all your money into one company. If you’re wrong, it can be a huge disaster. It’s always better to spread out your investments so that you won’t lose everything if something goes wrong.
With regard to reducing risk, CFD Trading should not be your sole source of income. Diversification also applies to your income. You don’t want to rely solely on CFD trading for an income.
You may be making millions, but you must accept the fact that there is a risk involved. Markets are something you cannot predict well.
14. Set Up Stops and Limits
Once you’ve decided what to trade, the order book will be updated accordingly. If the price moves against you, it will automatically cancel the trade. This is because you’re automating the trading.
You will always be able to keep track of your CFD trades. That helps you in a few major ways. First, it reduces your risk exposure. Second, it allows you to estimate your potential profits on the trade.
Another benefit is that you can lock in your profits by using stops and limits. So, if you make a profit on a trade with the right stops and limits, you can be sure that those profits will be locked in for you.
15. Choosing Your Market
There are lots of different markets you can trade in. This is one of the best things about CFD trading. If you’ve been paying attention, then knowledge and making the right moves are important.
Naturally, it is also very important to choose your market correctly. Ideally, you want to pick a market that you know about. This way you will hit the ground running. You will know some strategies and probably have one in mind.
And if you are a complete beginner without any knowledge of any market, then at least get some understanding of a market you genuinely want. This will help you stay motivated and also keep you on track.
And there is always the option to use a demo account when you do not have enough knowledge of a particular market. But the main gist is to start with a market you are comfortable with.
Plus500 is a trusted global brand that offers an easy-to-use trading platform for online traders, alongside access to share trading, crypto and a thorough selection of CFDs.
79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
16. Control Leverage
In financial markets, leverage means having much greater exposure than one would normally have in order to gain a profit. Leverage allows a trader to make large profits quickly without risking his entire capital base. Traders use leverage to magnify small gains into larger ones. For example, if a trader buys shares worth $100,000 and sells them for $200,000, he will realize a 100% return on his investment. But if he were to buy those same shares for $50,000 and sell them for $150,000, his profit would be 300%.
In CFD trading, the term leverage means something quite specific. It essentially means your ability to trade where you do not pay the full price of your position. It is an essential thing when it comes to CFD trading. And traders use this tool to their advantage. When done right, leverage can be very powerful.
An experienced trader will have his stop loss levels set under his trades. These are used to protect against losses if the market moves against him. You should never just leave them alone though; they need to be adjusted every once in a while, so that your position doesn’t get too large or small.
You should also keep in mind that not every trade goes up in value. Some trades go down in price. Don’t chase them too hard. Sometimes they just fall apart. There is something important to keep in mind, though. Always be sure that you can take a hit if all your positions close at the levels you set. Being on the other side of a leveraged transaction can be quite devastating. But done right, this can be an awesome thing that will give you tons of profit.
Bonus Tip: There Always Will Be Other Opportunities
Before wrapping up, we wanted to leave you with one more thing. This is more of a mindset than a tip. But, always remember that there will be other opportunities. You might have closed a winning trade way too early.
Were you right? Was the market moving against you? Did something come up that made you change your mind? Think about these things before closing out your position, because if you do, you’ll save yourself a lot of trouble down the road.
And now you regret your decision. You could have made so much money if you had acted earlier. However, the best part of CFD trading is that there will be other chances. And it is not a big deal. So do not panic right now. Take your time and think things through before acting.
Chances are you will just create way too much unnecessary pressure for yourself to jump back in the market. And in the worst-case scenario, you could make a bad decision to try and recoup from an earlier mistake.
You can take your time. Reassess things and make sure they’re working out right. Make sure you’ve got everything covered before moving forward. Be aware that you might lose out on future earnings. Don’t let yourself get too upset about past losses. Know that there will be other opportunities to rake in those profits.
Wrapping Up
Use these CFD trading tips & tricks. We’re not trying to sell you something – we’re simply sharing what we’ve learned through experience. So let us give you a quick summary of how we think about trading. First, you should understand that trading involves risk. That means that you could lose your entire investment. Second, you must learn to manage your emotions. Third, you must learn to trade within your own personal limits. Finally, you must learn to accept losses. These are the four rules of successful trading. We hope this article has helped you improve your CFD trading skills – we wish you much success!
Frequently Asked Questions
What are CFDs?
Derivative products are financial instruments whose value depends on an underlying asset or security. An example of a contract for difference (CFD) is an agreement between two parties in which one party agrees to sell something at a specified price on a future date while the second party agrees to buy that item on that same date. In this case, the buyer pays the seller today, but receives whatever the market value of the goods was on the delivery date.
What are the trends in CFDs?
By the late 1990’s, CFDs were introduced into the retail markets while the 2000’s and 2010’s saw the introduction of exchange traded and centrally cleared CFDs, which laid the foundation for dynamic growth. The trend in CFD trading has changed over the past few years. Traders used to focus solely on forex but now they trade all sorts of assets including stocks, commodities, indices, bonds, ETFs, currencies, and cryptocurrencies. They may not necessarily choose one type of instrument at a time but rather combine instruments together into what’s called “trading strategies.”
Award-Winning Trading Brokers:
Rating:
Regulated By:
FCA, CySEC, ASIC, FMA, FSA, FSCA
CySEC (EU), FCA (UK), ASIC (Australia)
BaFin, FCA
Demo Account:
✔ Free
✔ Free
✔ Free
Live Account:
$100
$200
0
Spreads From:
Variable from 0.5 bps
Variable from 1.0 bps in EUR/USD
Variable from 0.4 bps
Selection Of Instruments:
2000+
1000+
17.000+ (FX, Stocks, CFDs, Commodities and more)
Support:
24/7
24/7
24/7
Payout:
1 – 3 Days
1 – 3 Days
1 – 3 Days
79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
RATING:
REGULATED BY:
FCA, CySEC, ASIC, FMA, FSA, FSCA
CySEC (EU), FCA (UK), ASIC (Australia)
BaFin, FCA
SPREADS FROM:
Variable from 0.5 bps
Variable from 1.0 bps in EUR/USD
Variable from 0.4 bps
SELECTION OF INSTRUMENTS:
2000+
1000+
17.000+ (FX, Stocks, CFDs, Commodities and more)
What’s happening to CFD brokers?
Regulators are becoming increasingly strict with online trading companies when it comes to the sale of financial derivatives. In late 2017, we saw a huge increase in the number of CFDs being traded. This was driven by two factors. Firstly, regulators allowed retail investors to trade CFDs without having to pay any fees. Secondly, new platforms were launched which made it easier than ever before to gain access to this market. The rise of CFDs has brought many new opportunities for traders but also left some brokers struggling. With so many different platforms available, it can be difficult to know which broker offers the best trading experience.
What are the most useful CFD trading tips?
If you want to know our single most important CFD trading tip, then it’s this: always place stop-loss orders when you trade options.
If you want to trade successfully, it’s important to understand what drives prices – and why they move in one direction or another. There are many different factors at play, including fundamental news events (like new economic reports), technical analysis, sentiment, and supply/demand dynamics.
How do I know if a demo account is right for me?
It depends on what you want from a trading platform. If you just want to try out some strategies without risking any money, then you should sign up to a free demo account. This will give you access to all the tools needed to test your strategy without actually investing any real cash. Once you’ve decided which strategy suits you best, it’s worth signing up for a paid account so you can start making actual trades.
What are the best ways to get started?
The first step is to decide whether you want to trade forex (currency trading) or CFDs. Forex is typically traded through a stockbroker where it’s executed by brokers who charge fees. With CFDs, traders don’t pay any brokerage charges but they do incur spreads which are extra costs charged by the broker. The next step is to decide which broker you want to work with. There are many brokers out there, so it’s important to choose one that suits your needs.
What are the benefits of CFDs?
The main benefit of CFD trading is that it allows investors to gain exposure to the price movement of financial assets without actually owning them. For example, if you believe that Apple will increase its stock price by 5% next year, but don’t want to spend $10,000 buying 500 shares yourself, then you could invest $5,000 into CFDs which would allow you to profit from this rise in share prices. You don’t need to worry about putting up any capital and it gives you complete control over your exposure.
CFD trading can be done from anywhere with access to the internet. It means you don’t need to be at home during the day to trade. Most platforms allow customers to set up alerts so that they know when certain markets move in their favour. This allows them to take advantage of opportunities without being tied down by working hours.
Will CFD trading make me rich?
I don’t know if it will make you rich but CFDs allow investors to speculate on price movements without actually buying the underlying product. They offer some protection against losses but not unlimited risk. It’s similar to betting on sports – the odds are always stacked against you. And like gambling, CFD trading isn’t suitable for everyone. If you’re looking at making some extra cash by day trading, then CFDs could certainly help you do that. I’ve seen it happen before where traders have made thousands from just one trade. But this all comes down to finding a broker who has a good reputation and offers a platform which suits your needs and budget.
What‘s the difference between binary options and CFD trading?
Binary options and CFDs are both financial products based on share prices. The main difference is that CFDs give investors the chance to speculate on whether shares will rise or fall in price, whereas binary options involve betting against the stock market itself. Both types of contract allow investors to profit from the movement of the underlying asset, but only one type of contract gives them the opportunity to ‘short’ the currency they are trading.
How long will it take me to make money with CFD trading?
This really depends on where you start out. If you want to quickly become rich by day trading, then I would suggest that you don’t do this. But if you start off small and build from there, then it doesn’t matter so much how fast you make your first profit. It matters more that you keep making profits.
If you want to invest $100,000 then expect to earn around $1,200 per month (assuming you trade every day) – that is $14,400 a year, or a return of 14%. Don’t forget the power of compound interest when you reinvest the amount you started with and all of your gains over a long time! Patience and consistency are two keys to your success!
Other factors include your investment strategy, the volatility of the underlying assets, and which broker you choose. Some brokers offer training programs to help new traders achieve success quickly. Others may offer better customer service.
About the author – A. Denton
I am passionate about trading and investing. My passion for trading was born out of necessity at age 20 when I started flipping houses to pay off student loans. After being laid off from that job, I turned my attention back towards trading. Today, I am an experienced CFD trader who has made tens of thousands of dollars trading various financial instruments including Forex, Cryptocurrencies & Indices. My goal is to help others achieve success through education so they can avoid costly mistakes that I’ve made along the way!
Do you want to learn about trading? Start learning about trading today from the best course providers!
Award-Winning Trading Courses:
Asia Forex Mentor
Investors Underground
Bulls on WallStreet
Rating:
Founder:
Ezekiel Chew is the founder of this course. He is a well-known trader and successful businessman.
Nathan Michaud is the one who started this platform. He is a famous stock market trader.
Kunal Desai launched this course. He is an American stock market trader and cryptocurrency investor.
Ideal For:
This course is best for learning day trading.
IU is the best for learning about the stock market.
Bulls on WallStreet is the most satisfactory course to learn trading through live sessions.
Course Material
They have recorded video tutorials with proper explanations of the strategies and techniques that the mentor has used himself.
Provides videos on the basics of trading and advanced education. You also get access to one of the giant chatrooms for traders.
Gives live classes, quizzes, feedback, and an online trading simulator.
Cost:
The standard price for learning on this platform is $997 .
At around $2,700, you will get an annual membership and common course material.
The approximate cost is $1,500 for annual enrollment in the course.
