Rule No. 1 - Follow money management
If you do not want to be affected by a long string of unprofitable trades that ruins your account, you must follow money management. That means you must firmly set the highest percentage of your account deposit which you can invest into a single option. This percentage should ideally be low. Less experienced traders should set it to 2%, or fifty times less than the amount of money you have on your broker account. More experienced traders can choose to trade with digits such as 4% or 5% of their account.
If your trades are unprofitable in the long term, you will at least begin to pay attention, stop early enough and don't lose your entire account. In the opposite case, that is your trading is profitable, your account will not grow so fast but with more confidence.
Not all brokers offer cheap options. At many places, the minimum trade amount is $50! That is inaccesible for beginners unless you wish to deposit 50×50 = $2500, or risk with a small bankroll.
Rule No. 2 - the skill of holding back
You open the trading platform, get ready to trade but all you see are the prices moving nowhere. Nothing interesting happens, no remarkable trading opportunity. What will you do? Will you just impassively watch the screen or directly leave?
Yes! If a suitable opportunity for trading doesn't come for a long time, there's no point in trading. In that case it is wise to either leave and come back later, or to wait and continue watching the markets. If the markets aren't moving in any direction, mathematics speaks in favor of the broker. Do not trade and wait instead. You need to choose profitable trades only, never trade just to "spin money". If you wish to spin money, you are better off visiting the closest casino.
Rule No. 3 - Choose one of many trading opportunities
If you already see some interesting trade opportunities and there's multiple of them, try to choose only the most profitable single one. By reducing three or four planned trades into the one you trust the most, you will often filter out the trades that wouldn't pay off. Your trade volume will be reduced but your ROI - return on investment - will be increased.
Rule No. 4 - Be clear about what you want to trade
A common mistake made by newbies is chaoticness: the trader is watching too many graphs at the same time, making too many combinations, jumping from one graph to another without a clear goal. Simply said, the market will be over his head. This is usually a road to perdition.
Whoever wants to trade successfully must be clear about the goal he/she has when entering the market and what situations he/she wants to trade with CFD. Until you are a professional, you cannot do everything at the same time. I personally have good experience with always focusing on just one thing, one type of situation on the market.
You can trade with trends, that means situations when the market goes steadily up or down for a certain amount of time. In this case, the trader bets on continuation of the set trend. There are also anti trend strategies which are on the contrary bets on the reversal of the current trend. You may also sometimes hear the term "breakout" which is a situation when the market is stable for a long time and then suddenly breaks lose and starts to radically rise or fall.
Rule No. 5 - Risk decomposition
If you have invested $20 into an EUR/USD CFD, then $20 into an EUR/GBP CFD, you'd better not invest another $20 into an EUR/CHF call option. Why is that? You would suddenly have three trades and in total $60 bound to the rise of the euro. If euro drops, all three trades would go wrong and it would cost you all of $60. You do not want to risk a triple loss. Due to this reason some traders have a limit: a maximum of two trades on one currency can be opened at the same time.
Risk diversification among multiple assets makes sense and may pay off. After all, professional traders from investment funds have risk diversified really well, among dozens of various assets. Thanks to this they can reach relatively stable yearly profits with their trading strategies. It is worth noting that they use much more sophisticated financial instruments than CFDs which are indended mostly for small investors.Make money in three easy steps!
My method cannot be used everywhere. Most banks and traders do not know what this method is about. And even when they do know about it, they would never, under any conditions, provide it to ordinary people. That's why it's very important to choose a reliable licensed broker who will allow you to make money. These are my two favourite brokers. Register with one of them - or even both of them. They both offer advice, video tutorials and a personal adviser - absolutely free.
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