When you start buying and selling Contracts for Difference (CFDs) through an online portal like UFX’s trading platform, it’s important to know not only what you should be doing, but also what you shouldn’t be doing.
To profit as a trader, you first need to research the top brokers online, so you can best select the trading environment that suits your needs, steering clear of disreputable brokers who might not offer the best protection for your funds and personal information.
Four Golden Rules of Trading
#1 Understanding there will always be ups and downs
Successful trading is part art, part science, and requires persistence and a desire to learn. Anyone can become a trader, but is takes time to garner enough knowledge and experience.
You must also be willing to learn from your mistakes. So long as you remain aware of your strengths and weaknesses, you’ll be able to work on areas where there’s room for improvement, helping you to succeed in the long run.
#2 Set realistic goals
Most of us would like to be rich, but it’s often best to look at trading as a way of increasing your monthly income. Be sure you know what you want to achieve and how much time and capital it will probably take to reach your trading goals. Work out how much money you’re prepared to risk, whether your professional skills and experience will lend themselves to trading, and how you intend to use any profits you make.
You’ll also need to factor in the amount of time, effort, and money it might take to improve your trading knowledge. Sometimes even a faster computer or mobile device might better your daily trading experience.
Thinking about your personal needs and goals in terms of risk and reward will also get you into the right state of mind for day trading. Be as precise and honest with yourself as possible. Aiming high is great, but trading is a business, and you need to keep your feet firmly on the ground.
#3 Chose your trading strategies
Once you’ve decided what your financial goals are, you’ll need to work on your trading strategy accordingly.
If you have a full-time job, you probably won’t be able to spend much time trading during working hours, so you’ll need a trading strategy which doesn’t require you to be constantly in front of your computer and logged in to the trading platform. Swing trading, a trading strategy where positions are usually held for several days, could be the best approach If you’re willing to take higher risks to earn larger profits. Afterwards, you could consider using more highly leveraged financial instruments over shorter periods of time.
#4 Control your emotions
Keeping a cool head is vital for your trading performance. That might sound obvious, but remaining disciplined, patient, and sticking to your strategy are harder than you might think, especially when the market goes against you. However, usually all price movements are ultimately reversible, and while thinking quickly is a key part of a successful trading strategy, taking account of the bigger picture is even more important. What seems like a large price movement over a period of a few minutes is often just a tiny blip over the course of a day, a week, or even a month.