There are a lot of aspects of CFD trading a lot of people aren’t familiar of. This holds true especially when stockbrokers try to sell ridiculously priced trading systems. Likewise, there are some brokers who would rather keep the not-so-pretty parts of trading away from the public. What we’re trying to say is that, not a lot of people, especially those in the Forex world, would be willing to reveal the ‘ugly’ truths once you become a trader. That’s what we’re going to reveal.


Today, we’re going to share the top 10 things that no one ever told about CFD trading.

1. It’s Important to Use Logic, and Not Emotion

A trader shouldn’t be basing his or her decisions on a so-called gut feeling, hoping that this would make him successful in just a short amount of time, because more often than not, it’s very seldom that she’d enjoy a consistent profit doing this. This is also why there are trading rules and it’s very important to stick to them at all times.

2. Limit Exposure to a Single Trade and Don’t Focus on That

Believe it or not, a trader who bets 50% or even 100% of his trading capital on a single trade doesn’t make him a trader, but more of a gambler. If you want to ensure success, it’s highly advisable to not risk more than 2% of the available capital on a single trade– this would also give you the assurance that no single event would be able to wipe out your CFD account.

3. It’s Completely Fine to Let Your Profits Run and Cut Your Losses

A lot of traders are guilty of wiping out their trading accounts because they fail to follow the rule most of the time. Basically, they have the tendency of clinging to a losing trade, and believe that it’s ideal to cash in on a profitable trade. The truth is, doing this early would lead in a series of small wins, as well as catastrophic losses that are a little complicated to handle.

4. Combine Technical Analysis and Fundamental Analysis

Some traders use a combination of fundamental analysis as well as technical analysis at the same time, because this has a better chance of becoming more successful unlike utilizing only one of these methods. As a rule of thumb, the fundamental analysis should be used as a “trigger” and the actual analysis to time the actual entry of the trade.

5. Pay Attention to Your Weaknesses As Well

The most important difference between winning and losing traders is their psychological makeup. Wherein, a winning trader learned not to quit, while a losing trader would rather give up when problems arise. Fortunately, with the help of the CMC markets you’ll have more reasons why you shouldn’t be giving up.


6. Never Add to Losing Trades

A good trader knows how to distinguish between the trending markets and range-bound. Failure to have this skill would increase the possibilities of committing a number of mistakes and this would also add to a losing trade because of the mistaken expectation which would also affect the price. Fortunately, one of the techniques that can be used in situations like this would be the employment of trend lines.

7. Timing Is Very Important

Despite the fact that you were able to predict the long-term direction of the market, entering the trade too early could lead to the downfall and possible losses. It’s very important to wait for a trigger first and confirm the signal before anything else. This would ensure you that there won’t be any problems along the way.

8. Diversify If You Can

Even in instances where the trader doesn’t risk more than 2% of his trading capital on a single CFD trade, this doesn’t give the guarantee that the portfolio is well-diversified. A good example of this would be trading in a range of shares in oil companies. The only indication that your chances are good is that, if one goes the ‘wrong’ direction and it would influence others to follow. That said, try your best to diversify across different industries as much as you can.

9. Stop Losses Should Be Used Wisely

Doing a trade without a stop loss could result in a quick and permanent wipe-out. Additionally, trading with stop losses are often set too tight that it often leads to destructive wipe outs. When using stop losses, give the market enough space for it to breathe.

10. Know the Risk Versus Reward

Being a trader, you should understand the tradeoffs that happens between the risk and reward. It’s never ideal to get into a trade where the potential reward is bigger than its potential risk.

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