Implementing a CFD Trading Plan to Become a Successful Trader
October 2nd, 2011
If you plan on being a successful trader in the long term then you need to develop a CFD trading plan
CFD Trading Explained
Deciding what instrument to trade
Deciding what instrument you are going to invest in is the first step in beginning your CFD trading plan.
The flexibility of CFD trading allows you to choose from a plethora of instruments including thousands of global shares, stock indices, commodities and more, you can even trade margined forex.
Entry Signal
Once you have decided what you are going to trade, you then need to decide how you are going to enter the CFD market.
The use of analysis tools is very effective in providing this, these include indicators, Japanese Candle Stick Patterns, Patterns, Swing trading. These tools can be used when trading CFDs both long and short.
You should place your CFD position when all of the signals are met. Be sure to place your trade in the trending direction.
Once you have entered the market with your CFD trade, you have the opportunity to add a variety of risk management tools to limit the liability of your position.
At this point money management philosophies like the two percent rule become integral. They help you decide how much of your trading funds will be risked on this CFD trade.
Trade Progression
Amend the stop at the first opportunity so that your position breaks even.
You should never add capital to a losing position, but if the trade becomes profitable adding additional funds is a good way to maximise profits
Closing your CFD trade
When to exit a trade is a dilemma that all CFD traders face.
When all of you initial goals are met it is time to close the trade.
For example, did you set yourself a certain price target or are you using the 3/1 ratio as a guide for your profit target. If you have and these are met then this is the point at which you should trigger your exit plan.
Once you have finished your trading plan the hard part of implementing and adhering to your CFD trading plan begins.
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