Building Your CFD Trading Plan
Once people hear about the benefits of trading CFDs, they often want to get started right away and you may feel the same — you just want to have a go. Resist the temptation, though, and spend some time thinking carefully about how you’re going to approach and manage your CFD trading before you put a cent at risk. When determining your trading plan, there are some important factors to consider, including:
Your method. It is important to develop a method you can replicate again and again. If you trade with little planning you will find it very difficult to work out what happened through luck and what happened through good management.
Your entry points. You need to know what trades you are looking out for and what conditions will trigger an entry into a position. Be sure never to change your reasons for being in a trade after you enter it — once you start doing this you can justify being in any trade because all you need to do is just change the reasons around.
Your exit points. You need to know where you will exit a position and how much you are willing to risk before you actually place the trade. While you can’t always tell exactly where your exit will be (because of market gapping), you should be very clear as to what conditions need to be satisfied for you to close out your trade.
Your record-keeping. You need to be clear about how you will keep track of your trading. Good record-keeping means that when you look back at how you have done you can easily see the things that you may need to change.