In this CFD tutorial I am going to explain on how you can make money with CFD trading.Now if you don’t know what a cfd is then you should read this article: What are CFDs?
The possibility that cfd trading gives to a trader
One of the reason that I like CFD trading so much is that it gives you so much possibilities to trade. You can use cfd trading to make a trade in forex, shares/stocks all over the world, top Indices, commodities and all kinds of funds. For example if you don’t see any opportunities to make money in the FTSE then you can always look to the German market and see if Volkswagen share fits your requirement to make a decent profit. Or you can trade in gold by using cfd trading if you believe that gold market gives a good opportunity to make a profit.
CFD Trading Step 1
The first thing you need in CFD trading is CFD broker. Its vital that you choose a good cfd broker. Because unfortunately there are still some brokers around that are scam. To avoid off getting a scam broker, you should take a broker that has licenses from Financial Authorities. In our brokers review you will find what our experiences are with different brokers. Our top picks at the moment are Plus500 and Markets.com. You can the reviews here: Plus500 Review & Markets.com Review.
CFD Trading Step 2
After you have open a CFD trading account or if you already have one then it is time to make some profit. Here is the first thing that you should do. Create a trading plan. A trading plan is a simple plan where it states why you want invest or trade in this object and at which price point you should get in or get out. One of the best way of determine a buying point is to use make use of the horizontal lines and trend lines. By using both U can pinpoint the price point where you should enter the market (buy the object) or leave the market (selling the object). If you want to know more about buying signales and selling signales then read this article: buying & selling signals.
Protect the down size risk
Have you ever heard of the first two rules of Warren Buffet in investing?
Rule nr.1: Never lose money
Rule nr.2: Never forget rule number One!
I love that rule. That’s why I always use a stop loss order to limit my potential loss.
By using a stop loss order, I am in control of my risk management. Meaning that I can control my potential losses and keep it small when the trading doesn’t work out well. And when it works out well I can make a huge profit while my loss is small.
A CFD trading making money extra tip: Use a stop loss order to protect your profit.
A stop loss order is used to keep you from losing money but it can also be used to secure your profit. Let’s you say your current trade is making a profit. Then all you need to do is to move up the stop loss order.
Let’s say the stock that you have bought at 20 pounds currently has a value of 35 pounds. The best thing to do now is to move the stop loss order to a price of 33 pounds. This way if the stock suddenly drops in price to 25 pounds, you will still have a profit of 13 pounds instead of 5 small pounds. If you have bought the stock with cfd then you profit will be a lot bigger then 13 pounds per share because of the leverage.