You have money on your hand and you want to invest it with trading CFDs. You have read some information about it and got a trading account. You think that it’s time to get started and open some trades. Not that fast! Making trades randomly will only hurt your trades. In fact, you won’t get too far that way. There are basic paradigms that you have to follow when you start trading and it is important to stick to these important points.
From the very start, you have to treat trading as a real business, something that you are serious about, and consistently improve your trading skills to make more profitable trades. If you get to understand the trading strategies used in CFD trading, you will know that they fall into 2 camps – the technical and fundamental strategies. Fundamental traders are the close examination of the fundamental aspects of a company of a particular industry.
Most of the time, fundamental strategies in trading are used on long-term trading positions and not on active trading practices that take place within a day. The effectiveness of this strategy is proven by most successful traders.
Breakouts
This trading strategy is pretty common and seeks to identify important price levels of a particular asset. If the price reaches a certain level, you can buy or sell it. One important thing that you should remember when it comes to breakout trading is to refrain from trading in a market with unclear signals as to where the direction or the overall trend is going. You need a clear understanding of the market trend as well as its direction to be able to succeed here.
Trend Following
This is another common trading strategy that aims for a long-term holding of position. Trend following holds a trading position for as long as a few weeks or even months as the trader rides on the price trend. If you are a trader who isn’t that interested in actively buying and selling assets, this trading style is right for you.
Scalping
For active traders, scalping is a trading strategy that’s ideal for you. Traders get to identify small opportunities to earn profits in a specific market. Scalping allows you to make a few dozens of trades every day as you pinpoint trading opportunities to earn more profits.
Swing Trading
Swing trading in trading CFDs is short to medium term that lasts for a few days to a couple of weeks. Traders who use this strategy are mainly employing technical analysis to check possible trading opportunities. There are also instances that fundamental analysis is used but it is not very common.
The main goal of swing traders is to acquire a potential price movement. Although there are traders who are seeking to use markets that are volatile and have lots of movements, others are still into markets that are more stable. Swing traders are keen on capturing chunks of price movements and once they spot one, they move on and find the next trading opportunity.