Starting slowly with CFD trading as a newbie can be a good decision as it is relatively simple but building a trading strategy over time that can help you focus on certain markets based on your learnings and understanding is one of the keys to successfully trade.
An analysis of yourtrading decisions during your first few months and reviewing them will enable you to solidify and refine your plan based on the growth of your market knowledge and confidence.
Below are some tips and ideas that you can start applying in your trading sessions
Strong Market insights from Analysis and Research
One of the best tools in your journey in CFD trading is being able to have the option of doing research about the market and understanding that is an integral part of your strategy. Having the ability to research and check the market can give you a better understanding as to what a good trading decision would be and the potential trading ideas you may have based on testing certain decisions against the research you have made.
Fundamental and Technical Analysis
There are two categories in market research: Fundamental and Technical analysis
Market research falls into two main categories; Technical and Fundamental analysis. If you are a trader who relies on Fundamental analysis, that means you are most likely focusing on the bigger picture by analyzing events and factors that influence the price movement. This means you are most likely to look at central bank decisions, released economic data and even the changes in the norms of supply and demand. Other would also look into the state of the government based on an election, certain public figure’s speeches and more that can definitely have an effect on the markets volatility
As a technical Analyst, you would simply look at the market at a granular or pattern perspective that marks or projects the potential future movement of the market. Those who use this form of analysis would use tools that indicate the plot market movement that can compare chart patterns or trends for evaluation. Some would even go as far as past results and will be used to evaluate where the market can be headed next through the past patterns.
Those who are using a Technical Analyst’s perspective can have very powerful market insights that explains the development of trades, and even identify potential opportunities for trading.
If you are able to apply both analysis increases your chance to have way better insight in terms of the markets movement and such practices of balancing both can be very beneficial to any trader
Long term Strategy
As you begin trading CFDs, your strategy will be very simple and not so extensive. This can be very beneficial to a newbie for as long as you have the right reasons why you enter the market and have a clear exit strategy in your plans.
Having a very good trading plan is very important but analyzing your own performance is something that a lot of traders overlook. This becomes an integral tool for improving your strategy and can be a great formative framework for your future. Most traders should keep a trading journal that accounts the past trading decisions you have made and have a breakdown of the positive and negative results of the strategy you used during that moment. Keeping this record will help you check how much you risk as a trader and you are able to weigh and analyze on whether or not you are being too cautious of a trader or too rash.
