CFD stands for Contract for Difference. It is s contract between two parties. There are “buyer” and “seller”. CFD trading allow you to trade without having to buy and sell share, currency or future. Every CFD trader need CFD trading strategies to increase their profits.
One thing that every CFD trader will want to do is build up a solid and strong foundation. That can help trader conquer all kind of market situation and conditions.
CFD Trading Strategies
There are lots of things that CFD traders can do to achieve this purpose. And by using various CFD trading strategies, trader should be able to increase the trading gains from time to time.
No matter what the type of trading that people do, creating a trading plan is a must if they want to get the profit they yearn.
In CFD trading strategies you will need this trading plan too. A trading plan will involve different aspect such as entry strategy, money management strategy, risk management strategy, in profit stop loss, and also record keeping strategy.
Create a CFD Stop
Preserving the precious capital is one thing that every trader should pay attention. It means that traders need to keep their losses small. And the best thing to do it is by creating a CFD stop.
A CFD Stop acts like a warning sign where trader must stop trading at a specific point that they already set up before, in order to minimize the loss.
Long and Short
The long and short position strategy of CFD trading strategies in this case refer to the standing position of an investor.
Long position is when the investor purchases an asset and hoping that the value of that asset will increase over the life of the investment contract.
In the other hand, short position happens when the investors sell an asset at a certain level. And they intend to purchase it later on. Based on the expectation that that the price of that asset will fall down during the life of the contract.
Short Term and Long Term
This is the one of CFD trading strategies that cover up the time frame of the trading. The short term strategy is where the trader chooses to trade and gain the profit by exploiting the price change from minute to minute or hour to hour.
Long term strategy itself is the one where the trader chooses to get larger price difference. Thus the trader gains bigger profit by taking time to analyze the whole thing, where it could last from a month or even a year.
Protective Strategy Hedging
It is important to incorporate a protective strategy, to protect people position and also prevent them from new losses.
This strategy of CFD trading strategies is usually implemented during a very volatile market. It is where price movement act so unpredictably and the traders want to reduce the risk they have to deal with.
In this strategy, the traders who are already in open position will take opposing position. And they have to open a trade that is inversely correlated to the open position.
Those are only small examples of CFD trading strategies that trader can use. There are other strategies such as news trading, range trading, breakout trading and momentum trading.
The most important thing is to get better understanding on each available strategy in order to be able to apply the right strategy on the right time for maximum profit.