Your survivor’s guide to trading CFDs
Trading can be an exciting but tricky journey to navigate. There are a few basic rules that can help any trader build a strong foundation and set you off on the right
Many of these rules exist, and we’ll be offering lots of them on this blog. Here are just 5 simples ones you should come to terms with if you’re going to be a successful trader.
1) Create a demo account
Before you dive deep into the world of trading, we suggest you set up a demo account to test the waters. At TIOmarkets, we offer the chance to test out our tips in a trading environment at no cost, so you don’t even need to risk any investment so early on. So our advice to you, trade with a live account once you’ve had some success on the demo.
2) Limit your leverage
High leverage can increase your profits from trading, but it can also increase your losses by the same margin. Consider limiting your leverage in order to contain risk to a level that’s acceptable to you.
3) Be a smart trader
Do your research. Netflix facing increasing competition from Disney? Google looking outside of advertising for new revenue channels? These are things you need to know if you’re trading those stocks. On forex, you need to keep informed about the US-China trade war and other geopolitical events that will impact currency markets.
4) Don’t chase your losses
Stay committed to your initial strategy. Why you ask? Because as soon as you start reacting irrationally, you’ll make mistakes.
Removing your stop loss, increasing your order sizes or trading in unfamiliar territory is the worst way to react to a few bad trades. Get a plan, stick with it for a while: win, lose or break-even.
5) Diversify your investments
Some brokers (like us) give you access to a wide variety of markets and instruments.
Don’t put all your money into Amazon stocks just because they’re having a good quarter.
Instead, make sure you’re not fully exposed to a slump in Amazon’s stock price by putting some of your investment in gold, or the Japanese Yen, maybe an energies stock like Exxon – whatever makes sense at the time, as long as you’re not fully reliant on the strong performance of a single asset.
More great tips coming your way on this blog soon. Be sure to stay tuned, and in the meantime we hope you enjoy trading with us.