Strategy for Having a Proper CFD Trading

Trading CFDs is a quite popular and straight forward way of trading Shares. Initially shares were traded the traditional way by simply approaching a broker on the floor of a stock exchange and asking him to execute your order. In the past times that would look like this:

You are calling a broker on the phone and ask him about 50 shares on Apple. He then checks whether there is counterparty, i.e. a seller willing to sell you 50 shares. Eventually there is such party and the price you both agree on is $300 per share. You end up giving $15000 for the shares and a commission for your broker. It is quite an expensive deal if you don’t have the $15K of course. 

As opposed to traditional shares trading CFDs based on shares will allow you to execute the same deal without getting up from your computer and with just $150 available in your account. Yes, it is possible of course! For example these excellent conditions for CFDs on shares will allow you to do that quickly and cost effectively. All you need to do is to follow few simple steps.
1. Open an account with a CFD broker. There is a big choice of CFD brokers out there – mostly you can keep an eye on the regulation, i.e. who supervises the broker so it can fairly execute your deals. The strictest regime of all is the UK so choosing a broker based there will ensure you security of funds and fair execution. The nature of CFD trading imposes that the broker is your counterparty for each tarde and therefore there is a conflict of interest between you and your broker. In this case the fair execution is of great importance.

2. Select your trading strategy – having a proper trading strategy is as important a s choosing the best broker. Here you should ask yourself what kind of person are you. Are you willing to take the risk or you prefer a quite long term return of 2%? In both cases be honest to yourself and design your strategy around this. Once decided follow your rules strictly and don’t allow emotion to take over.

3. Start with a small amount of money – as previously said $150 will be enough to purchase shares priced at $15000. This is possible because leverage is used. The leverage allows you to open positions significantly higher than what you are ready to open. For example a leverage of 100:1 wil lallow you to buy shares priced and 100 times more than the amount you initially have in your account. However be careful because the leverage can lead to big losses as well as to big gains.

Those were some basic steps you need to follow during your trading journey. In order to become a professional cfd trader make sure you only trade with a clear idea of your strategy and no high expectations. There are not easy money and you will certainly come to this conclusion sooner or later.

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