Reduce risks and develop a meaningful CFD strategy!
There are now plenty of cheap brokers to choose from if traders only take the time they need to accurately compare the account models and the services of the providers before starting CFD trading . In some cases, the offers are too similar to simply be convinced of a new customer bonus or a low requirement for opening a merchant account. It is almost even more important, especially for beginners, to learn CFD trading and to find the right CFD strategy for beginners, with which quick successes can be achieved based on their own risk tolerance and return expectations.
CFD trading for beginners can take place in different ways. More and more CFD brokers offer the opportunity to participate in so-called «social trading».
Learn risks and losses in strategic CFD trading
How can you learn a CFD strategy without having to take risks? This works best if brokers give their customers the opportunity to use a free demo account for at least a few weeks or months . Play money is the best way to get to know trading in real time and, with unlimited leeway, learn everything you need to know about one or the other CFD strategy for trading. The brokers themselves often present the best-known trading strategies to their investors in an easily understandable way as part of educational programs . If questions persist, German-speaking customer service is ideal for clarifying any final problems.
Although CFD trading is associated with a high level of risk, high profits can sometimes be achieved. To do this, traders have to keep an eye on the prices continuously. B. Use a real-time financial chart.
The trend following strategy — also profitable when entering CFD trading
The best known of the trading strategies for CFD traders is the so-called trend following strategy . The idea behind this approach of a CFD strategy for trading with «Contracts for Difference» is that in many cases the majority of investors simply get their decision right when trading. This means that traders literally swim with the flow and orientate themselves when trading on the behavioral patterns of the majority of traders. Without claiming to be general, it could be said that the likelihood of a continuing trend is greater than a reversal of the existing trend.
Comparing CFDs For example, it turns out that the end of a trend in contracts for difference can often occur much faster due to the very volatile market. Nevertheless, a precise analysis of the market situation when learning CFD strategy can be a good way to make first profits, especially at the beginning. With this CFD strategy for trading it is important to realize that in many cases even quite clear trends can be identified, from which clear trend lines can be derived. In itself, the trend following strategy is a profitable approach at the beginning — even with CFD trading. The concept of trend following is not suitable in longer sideways markets because traders can quickly fall victim to false signals.
The contra trend strategy — swim against the current
Another CFD trading strategy — strictly speaking the exact counterpart of the trend following strategy — is the contra trend strategy . The name already contains the central indication of how it works in reality. In contrast to the trend following strategy, the point is to act against the trend. Investors who want to learn CFD trading as beginners should proceed a little more cautiously from an expert’s point of view. The elementary keyword in connection with the contra-trend strategy is “anti-cyclical”.
As sure as it may seem to trust in obvious trends, trusting in the end of a trend can be just as lucrativeto bet when learning CFD trading. With the contra-trend approach, the risk for traders is often higher.
But: Both with the trend following strategy and with the counter-trend strategy, traders can often take precautionary measures through additional functions for CFD trading.
Many brokers allow the inclusion of extra functions called «stop loss», «early closure» or «Stop Position» depending on the broker. This harbors the chance to take profits early or to minimize losses. This CFD strategy for trading involves permanent analyzes of the markets and price changesindispensable — because timing is everything in order to recognize impending corrections and a reversal of trends in good time.
Regardless of whether it is an imminent price high or a decline. The CFD trading strategy relies on important indicators for trading, which traders can access from many brokers using chart software and additional tools for the trading platforms.
Leverage brings high profits even in a short period of time
It is noticeable in connection with the trend following strategy and the counter-trend strategy that traders can not only realize high profits if they get in early. The leverage in CFD trading means that high returns can be achieved even within a short period of time . At this point, sideways phases can certainly be interpreted as an imminent end of a trend. Bet on falling or rising prices? The analysis provides clarity on this point with a view to the tradable contracts for difference.
Which naturally applies to every CFD strategy for trading in the true sense of the word. You can also use a free demo accounthelp not to have to accept losses straight away. Once again, it should be noted at this point that the losses at the end, depending on the height of the included lever for orders can be high very, if the broker does not prevent from the outset by closing positions automatically when the deposited collateral (margin) on the merchant account is used up for the respective position.
Professional support from brokers as CFD start-up help
In the increasing competition for new customers , brokers always come up with new things with which they want to secure the favor of future dealers. In CFD trading for beginners, this competition turns out to be a plus point that should not be underestimated. Because not only good customer service and chart tools help investors to get to know one or the other CFD strategy for trading.
If traders also receive indicators on price developments from the broker in the pre-trading environment , the decision in favor of the right strategy with or against the trend is easier at the beginning of the new trading day.
In their «Education» sections, many brokers also provide professional tips and, depending on the account model, even individual support from experienced consultants. Combined with the chance to use social trading models , the only thing that stands in the way of learning CFD trading with real money is paying into the trader’s account and setting the desired stake and leverage.
Conclusion: CFD strategy
Speculative trading in CFDs involves risks. In order to be able to reduce this as much as possible, traders should develop a meaningful CFD strategy and learn to trade CFDs. The course of the course and movements in the market are shown to be relevant. Beginners in particular can initially underestimate the risks involved in trading leveraged financial products. It is therefore advisable to obtain thorough information about the financial product itself and about possible trading strategies .
The most popular trading strategies include trend following and contra trend strategies. Where in the trend following a clear upward or downward trend of a certain price forms the basis for the strategy, the contra-trend strategy represents the counterpart. In addition, various order supplements prove to be effective tools to protect a position from excessive losses secure.