The information on this page is not a personal recommendation and does not take into account your personal circ*mstances or appetite for risk.
Trading is a serious undertaking, one which you will no doubt have put a fair amount of time and thought into. It makes sense, therefore, to want your capital to yield a profit whilst controlling losses. Below are a few things to bear in mind every time you trade. Many are interlinked, but all are worth entertaining. Keep this list close to hand.
1. Gameplan: What’s yours? This doesn’t need to be anything fancy, but a framework to stick to and allow you to evaluate what you’ve been doing, right or wrong.
2. Don’t risk too much: You’re unlikely to call every trade right. The aim’s to stay in the game, so be sure to keep enough back to allow trading through the tough times. Scale up when profitable, and down when not.
3. Trade with conviction: Don’t trade for the sake of it. If worthwhile opportunities (on which to risk your money) can’t be identified, you may be best looking elsewhere or even sitting on your hands.
4. Take responsibility: Be sure of what you’re doing. You only get one chance to lose all your capital.
5. Run profits, not losses: If a profitable trade wants to become more profitable, let it be. If a trade is going wrong, why watch it get worse. Recovering losses is even harder work.
6. Stay disciplined: Don’t let your heart rule your head. You are risking money. Your money. The best traders keep their emotions in check.
7. Use protection: Losing trades need to be kept under control, while profits should also be protected. Use stop losses wherever you can, allowing for adequate breathing space.
8. Learn from your mistakes: Keeping record of both wins and losses can help avoid trip ups int he future.
9. Keep your feet on ground: Everybody has good streaks. Don’t let them go to your head.
10. Back to basics: Learning new things is great, but don’t get carried away. Remember the simple things.
11. Markets go down as well as up: Don’t rule out shorting. You can also profit from falling markets.
12. Respect the trend: Calling the bottom or top of the market is akin to catching a falling knife. It can be donebut you often get hurt. Going with the flow can be a lot easier. Be aware of the trend.
13. Risk/Reward: Is what you’re risking worth the potential reward? Is it prudent to put £500 on the block for the sake of gaining another £500? Some talk of a looking for rewards 3 times greater than what’s risked.
14. Take stock: Review your positions regularly. Is your reason for placing/being in a trade still valid?
15. Enjoy yourself!
FAQs
Why Are CFDs Illegal in the U.S.? Part of the reason why a CFD is illegal in the U.S. is that it is an over-the-counter (OTC) product, which means that it doesn't pass through regulated exchanges. Using leverage also allows for the possibility of larger losses and is a concern for regulators.
What does CFD stand for? ›
CFD stands for 'contract for difference', a type of derivative product that you can use to speculate on the future direction of a market's price.
How does Plus500 make money? ›
Plus500 is mainly compensated for its services through the "market spread".
Can you lose the entire amount invested in your CFD portfolio? ›
A small price change against your CFD position can have a big effect on your trading returns or losses. You can quickly lose your entire investment.
Is CFD just gambling? ›
CFD trading and gambling are two distinct activities. Whilst commonalities may exist as far as speculation is concerned, the one is not the same as the other. But to understand the differences requires having a fundamental understanding of both concept.
Why do so many CFD accounts lose money? ›
CFD Traders Reducing risk exposure
One of the main reasons many traders fail is the lack of risk management strategies. By failing to adopt certain risk management techniques and simply opening trades without protecting their trades with take-profit and stop-loss orders, they risk losing all their trading funds.
Are CFDs illegal in the US? ›
Additionally, most CFD brokers don't accept US citizens or US residents as clients. CFDs are illegal in the US because they are an over-the-counter (OTC) trading product. OTC trading products aren't listed on regulated exchanges like the New York Stock Exchange (NYSE), bypassing US regulatory bodies.
Is CFD good or bad? ›
CFDs are attractive to day traders who can use leverage to trade assets that are more costly to buy and sell. CFDs can be quite risky due to low industry regulation, potential lack of liquidity, and the need to maintain an adequate margin due to leveraged losses.
Is CFD trader legit? ›
CFDs are high-risk investments that can cause investors to lose most, or all, of their investment quickly. Fraudsters often promote CFD offerings that promise unrealistic returns.
Is +500 legit? ›
Plus500 is authorised by the following Tier-1 regulators: Financial Conduct Authority (FCA), Australian Securities & Investment Commission (ASIC), Japanese Financial Services Authority (JFSA), Financial Markets Authority (FMA), Monetary Authority of Singapore (MAS), and regulated in the European Union via the MiFID ...
How to start trading without money?
- Step 1: Learn Forex trading and strategies. ...
- Step 2: Practice on a demo account. ...
- Step 3: Explore options from trusted sources. ...
- Step 4: Be Patient and persistent. ...
- Step 5: Start with a no-deposit bonus or evaluation program. ...
- Step 6: Continuously learn and adapt.
Yes, Plus500 is a legitimate trading platform. It is publicly traded on the London Stock Exchange and is also regulated in multiple jurisdictions, including Australia, ensuring transparency for its users.
Can you make a living from CFD trading? ›
It's possible to make money trading CFDs with experience and a thorough understanding of how the financial markets work. But, it's well known that around 75% of retail traders (private investors) lose money when trading CFDs.
Why is CFD trading so hard? ›
This requires constant vigilance of the market and price movements. As well as the use of effective risk management to safeguard funds. Some of the most popular risk management tools used in CFD trading are stop-loss and take-profit orders.
How long should I hold CFD? ›
HOW LONG SHOULD I HOLD IT AND CAN I TAKE MONEY OUT EARLY? There is no required minimum holding or recommended period that you must keep your investment open for. CFDs are generally used for short term trading on price movements, often intraday. Your investment can be opened and closed at any time during market hours.
Is CFD available in the US? ›
CFDs cannot be traded in the US due to the fact that they are Over-The-Counter (OTC) products that are prohibited under US regulations. However, US traders who want to trade with Plus500 can do so by trading Futures contracts on the Plus500 US platform.
What is the penalty for trading CFDs in the US? ›
The CFTC can fine individuals up to $200,000 per violation for trading CFDs with an offshore broker. You may be denied access to US financial markets. The CFTC can also deny individuals access to US financial markets, including exchanges and clearinghouses, for trading CFDs with an offshore broker.
What countries is CFD banned in? ›
Is CFD trading legal? CFD trading is legal in many countries, including Australia, France, Germany, Italy, Spain and the UK. However, CFD trading is banned in some countries, including Belgium, Hong Kong and the US.
Is CFD trading banned? ›
In other words, except in countries explicitly prohibiting it, CFD trading is generally considered legal. Firstly, let's briefly introduce the concept, origin, and underlying assets of CFD trading. CFD, or Contract For Difference, is a financial derivative that emerged in the 1990s in London, UK.
