TRADING CFDS FOR A LIVING

CFDs are an incredibly popular trading vehicle, and for good reason. CFDs are a derivative investment, meaning that they get their value from the underlying asset they represent. As such, the trader never has to actually buy ownership shares or amounts of any asset. This, by nature, brings down the total investment per trade and opens the door to a larger profit, and of course, a potentially larger loss. However, when done properly, CRD trading can become a full time career and offer several perks. Becoming your own boss, earning a relatively high income, and working from the comfort of home just to name a few. If you want to give CFD trading a shot, follow the tips below and maybe one day, you’ll be doing it for a living!

TIP #1: START SMALL

One of the most important lessons I can get across here is to start small. CFDs are an asset class of their very own, and for good reason. They are far different from stocks, commodities, and any other asset on the market. Therefore, starting small gives you the opportunity to limit your losses while you make your way through the learning curve. I know that the goal here is to trade CFDs for a living, but you have to walk before you crawl. If you expose yourself to too much loss in the beginning, it can become discouraging and hinder your overall growth process as a CFD trader.

TIP #2: REINVEST YOUR EARNINGS

In order to become a full time CFD trader, you’re going to need to have a pretty sizable amount of capital. After all, the amount you can earn is ultimately limited by the amount of money you have to invest into the trading process. Therefore, if you’re going to make a full time income in the CFD trading process, you’re going to need to have plenty of money to invest. Unfortunately, you’ll never make it there if you spend your earnings. In the beginning, until you’ve built a large enough capital cushion to earn a real living as a trader, you should always reinvest your profits. This also has tax benefits in several countries around the world as the earned income is reinvested, it becomes tax free in many economic regions.

TIP #3: DON’T GET IMPULSIVE

As human beings, we often react to different things in our lives on impulse, it’s just the way we are wired. However, to be a successful CFD trader, it’s important that you never get impulsive. Acting too quickly without doing a proper analysis of the trend can be like playing a game of poker, and gamblers very rarely end up ahead. Always make sure that you trust your strategy and your indicators enough to use them, rather than making trades based on gut feelings and impulses.

TIP #4: STOP LOSSES MUST STAY PUT

First and foremost, it’s important to use stop losses when trading CFDs. This ultimately limits your potential losses, working as a great loss exposure management tool. When we set a stop loss, that is the maximum amount of money that we are willing to expose ourselves to losing at that time. However, when the value of the trade falls near the stop loss, many traders start to move them, chasing the trend downward and hoping for a rebound. In most cases, this will be a losing race as the trend downward will just about always lead to further losses!

TIP #5: DON’T DOUBLE YOUR LOSSES

The reality is that no matter how good of a trader you are, you will make losing trades occasionally. Just ask the greats like Warren Buffet and Carl Icahn, mistakes can be made! In many cases, when the value of the trade falls, traders will purchase yet another position of the same value at the lower price. Therefore, the asset doesn’t need to climb as far up to break even. However, this is another method that rarely works. Sometimes, it’s better to walk away than take a chance at expanding your losses.

FINAL THOUGHTS

At the end of the day, trading CFDs for a living isn’t an impossible feat. In fact, many people have come from little to nothing and built their way up as high income earning CFD traders. While not everyone will make it to trade CFDs for a living, those that are disciplined and follow the tips above have a much better chance of doing so!

This article was written for marketing purposes and does not constitute investment advice. The information in the article represents the general views of our experts and does not take into consideration the personal circumstances, investment experience or financial situation of any reader.