There are a lot of things to consider when you start trading. This article will tackle the top 9 tips that will help every trader ensure that they can start on the right path of CFD trading while ensuring that they manage their risks properly.
Make a Trading Plan
First things first – create a comprehensive trading plan. This tip made it to the top because it is very important to plan your trades ahead of time before you open a trading position. Inside the trading plan are the tips that will help you attain your trading goals.
Test Your Methods Before Trading in the Real Market
Now that you have a trading plan that you can follow, it is time to test your strategy and your trading plan in a demo or simulation account. This is a very important step especially for beginners to avoid suffering from severe losses.
Make a Trading Routine
A trading routine ensures that your activity every day aligns with the trading plan that you have. A trading routine may include waking up at the same time, every trading day, starting your trades at the same time, and checking the economic data before opening a position.
Avoid Opening a Position If There Are High Impact News Announcements
High impact news events make the market movement unpredictable and might push you to the side without your knowledge. As much as possible, when your economic calendar tells you that there is high-impact news to be announced within the day, avoid that time as much as possible to avoid suffering from extreme volatility.
Review Your Trades Constantly
Although time-consuming, reviewing your trades from time to time will help you in your overall success, in the long run. If you fail to review your trades, you will not be able to see the bigger picture, the good decisions that you made, and those that are considered as mistakes that contributed a lot to your failure.
CFD trading will take you on a roller coaster ride of emotions. In this case, you have to get yourself prepared and see to it that you can deal with these emotions effectively without affecting your trading decisions.
Go Back To Your Trading Plan When You Encounter Your Weakness
Throughout your trading session, you will encounter your weakness and you will start to feel disheartened. Then, a surge of emotions overflows. These emotions could cloud your trading decision. Don’t let these emotions affect your trading plan.
Don’t Forget to Use Stop Loss Order
You may not realize its importance sooner until you suffer your first huge loss. A Stop Loss order stops you from suffering from huge losses that might endanger your capital. Do not forget to use it properly when you open a position.
The Maximum Risk Per Trade Should Be 1%
When controlling your risk, the use of a stop loss order is beneficial. This is especially true among new traders, you must only risk 1% of your capital in every position you open.