How To Be A Successful CFD Trader

How To Be A Successful CFD Trader

The prize for becoming a successful CFD trader is what lures most investors into the contracts for difference markets. Tales of wild riches and sudden, steady trading income are banded around Internet forums and trading blogs all too readily, and it's no wonder

What is the secret for being a successful CFD trader? In my opinion, a successful CFD trader is one who treats trading seriously like a business as opposed to a hobby or the infamous quick to be rich scheme. There are 3 segments in this business - trading strategies, trading psychology and money management. In this article, I would like to focus on money management and discuss some best practices based on my experience as a CFD trader.

Before I proceed, allow me to stress that money management is an important segment in this business. But can you guess which is more important, trading strategies or money management? I guess many amateur traders will say trading strategies and this explains why they spend most of their time to look for the best trading strategies. On the other hand, I believe the answer from professional traders will be money management as they have already accepted the fact that no trading strategy will guarantee making money forever. As a result, it makes more sense to spend time on creating rules that help to preserve trading capital. There is a saying that a person has to quit trading as soon as his trading account balance is nil.

So, what is money management? As this term suggests, it is about how we manage our own money. One golden rule in investing is that we should only invest the money we can afford to lose. Novice traders tend to ask how much they should put into their trading accounts as initial capital. My answer is "it depends on individual traders." Why? It is because regardless of how much money a trader will use for trading, he must be prepared for the worst case scenario, i.e. even if he loses the entire sum, his current lifestyle would not be affected.

Although a trader can start trading as soon as he has funded his live account, it does not mean that he should immediately start placing trades. Let's use Tom (a hypothetical trader) as an example. Suppose he has $10,000 in his account. His first task is to figure out how much money he can use for each trade. This is absolutely critical in my opinion for all CFD traders to follow. Now here is another golden rule in CFD trading - we should use only a fixed percentage of our capital for each trade. Personally, I use 3%. Suppose Tom has decided to use 3% as well. The maximum risk he can take for his first trade will be $300 ($10,000 x 3%). The next task is to determine how many lots Tom can trade. In this respect, Tom has to look at the chart to decide where to place the entry price, the stop loss and the profit target; and determine the distance between the entry price and the stop loss.

Let's say Tom has determined the distance between the entry price and the stop loss to be 50 pips and each pip is worth $1. Tom can trade up to 6 mini lots. If the trade goes against Tom, he knows that his maximum drawdown is $300 and he still has $9,700 in his trading account.

I know amateur traders may find this a pain as they may think that it is too slow to make money in CFD. This is why I never say that CFD trading is a quick to be rich scheme because it is not. The problem is that an amateur trader tends to focus on the reward if the trade goes the right way. On the other hand, a professional trader focuses on the risk and asks how much he will lose if the trade goes against him. I hope you can get my point here.

The final best practice I am sharing here is an interesting one. We should not take more than one trade concurrently when they are correlated. Let's say we are looking for two currency pairs to buy. Many traders will buy both and there is nothing wrong if they follow the strategies. However, they should be aware that if they were to do this, they would be risking 6% of their accounts. If both trades are losing trades in the end, they will lose 6% of their accounts. Can you see the problem now? What should you do? Choose one of these pairs to buy and not both so that you will be risking only 3% of your account. Remember as a trader, your job is to preserve your trading capital.

I hope you will benefit from these best practices I have shared in this article. As a reminder, money management is an important segment in CFD trading business.

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The more businesses do, the better will be the results.A quick glance at multi-channel marketing:Multi-channel marketing encompasses every possible channel, be it online, offline, or the combination of both which helps in increasing customer outreach, encouraging the customers to respond and make the purchase through any preferred channel.For instance, a clothing brand can sell the products online through online Ecommerce portals can build its own portal to let customers browse the inventory directly, optimize the site for higher rankings, open retail outlets to enable physical shopping, launch email and social media marketing campaigns, print ads in magazines, participate in exhibitions, and pretty more.Instead of putting all the eggs in one basket, when businesses focus on multiple channels to market the product with the right strategy in place, the likelihood of conversion will increase and the risks of a huge failure diminish.A few glimpses of business success that multi-channel marketing has brought:Uniqlo is the first that has experimented with virtual dressing room and then mobile has become an integral part of multi-channel CX strategy. The “Style Your Life” campaign has increased its WeChat followers from 400,000 to 1 million.Rebecca Minkoff is the industry leader in multi-channel marketing that has evolved its marketing strategies by investing in digital platforms and technologies.Burberry brand has gone beyond common social media platforms to engage the fans in the real-time through messaging apps in China. It has experimented with a new collect-in-store feature to improve stock availability and reduce delivery times that has paid off to the business.It’s immersive!Still, unsure why businesses should move into multi-channel marketing orbits? Here’s the answer:In the hyper-connected world, the customers are already on the web, mobile, and physical stores, which means using a single channel to market the product will be ineffective because the customers are already multi-channel buyers. 80% of the marketer uses three to four digital channels to market the product to ensure success, which is a clear indication not going the multi-channel way will risk the businesses left behind.Beyond creating the presence on website, blog, or email, making the business available on Facebook, Instagram, Snapchat, or Twitter is all-important because the people are likely to see the favorite brands on the channel they are using. If they don’t see the business, definitely the competitors will be there.Note: Every single-channel under multi-channel marketing creates an experience which must be consistent across the channels, else the business will miss the mark.Let’s understand why strategizing is important:The multi-channel marketing strategy is a game plan that’s created to direct the efforts across the multitude of channels to achieve the defined goals. The business will decide which medium of communication- email, social channels, Google Ads, SEO optimization of website, television, or print media is effective in reaching out and interacting with the target audience.The clear understanding of various things such as the same blog will be shared on different platforms, the same content will be shared differently on distinct channels, is the target audience engaging with content published on different platforms, or the same strategy is bringing positive results on all the platforms, is vital to bring winning outcomes.The strategy must be tailored to business-specific strength, weakness, and goals to offer a consistent omnichannel experience to the users and enjoy a lot more benefits.The benefits that effective multi-channel marketing strategy brings on the table:Reach more peopleA brand cannot target all the citizens of the USA with the same message using the same platform as all the US people not necessarily use the same platform. With multi-channel marketing, sending the message to all the USA citizens through different channels become possible which eliminates the risk of the brand message not delivered to the target audience. With the little-to-extra investment, the user’s reach would increase.Catching the customers at the right momentThe brands cannot guarantee the fact that their customers actively use Facebook, LinkedIn, or email, which diminishes the chances of the brand message get heard. With a multi-channel approach, every possible platform is covered that ensure the target customer will discover the brand on the channel they use or like the most and can look into the brand’s offerings conveniently.Keep the brand on the top of the customer’s mindWhen the people find a brand on several channels they use, its image gets saved in their subconscious mind and they quickly remember the brand at the time they see it again. It’s a sign, the target customers may not have a need for the products in the present time, but when the need is created, they certainly look to the brand to get the product. In this manner, when the brand appears everywhere, the people with no initial interest can become the potential customer in the near future.Hold a tight grip on customer-generated contentThe customer’s reviews and word of mouth are the inseparable part of multi-channel marketing. The customer-generated content can be positive which can build the reputation or negative that can significantly ruin the brand. Again, it’s totally out of the businesses’ control, but leveraging intelligent tactics, it can be turned into powerful marketing media.For instance, the customers with negative comments when answered aptly and convincingly, it appeals to the rest of the customers who are reading the conversation. The customers with positive word of mouth can be turned into brand ambassador which bring more sales to the business at zero dollar investment.The sale is certain to surgeThe research study has proven that the army of customers build through multi-channel marketing spend more than the customers reached out with single-channel marketing.The reason behind multi-channel sales bringing winning upshots is that brand is getting more opportunities to connect with the customers at various stages of buying process, which further improves customer satisfaction (Not troubled with the same message on the same channel again and again), lower cost of acquisition (Spending bundles on PPC is not essential), and increase the bottom line (less investment and high sales volume).Getting more data means more customer’s informationWith multi-channel marketing, the businesses are having more data beforehand that helps in understanding the customers to the core and impact the customer’s purchase behavior accordingly. But, the data is equal to trash if it’s not organized and analyzed. Thanks to the digital marketing strategy that back-up the marketing plan with necessary digital tools which measure and analyze every micro-interaction in the customer’s journey for improved results.Stay dynamic to customer’s demandsThe technology advancement has not just connected the people with everything in a matter of seconds while making them crave for real-time transactions. It implies the modern customers are damn impatient and expect the results right here and right now, which can be fulfilled with multi-channel digital marketing.Connecting the dots, this form of marketing know where the customers are in their buying journey and how to interact with them with a tailored and quick-response strategy that meet their evolving needs and stay aligned the business strategy with dynamic needs.Improve retention with retargeting and remarketingAccording to a study, when people get leisure time, they spent most of the time browsing various things on mobile. The time they visit a website, a cookie is set that’s used by the marketers to target the users when they visit other websites or other channels. This form of retargeting helps in reminding the user what they have last seen or visited to bring them back to the website.Once, the customer has purchased a product or service from the website, the business can connect with them through different channels to remarket the similar products or inform them about new offers for retaining them to the website and repeat the purchase.Competitive advantageWhen the brand is not present at the channel where their competitors are excelling, it’s a signal the brand is losing the sales and ROI to the rivals. With a multi-channel marketing strategy, the brand won’t give a single opportunity to the competition to take away the customers and make money.Besides, being a good player in multi-channel marketing lets brand answer the new competitors popping-up with optimized marketing campaigns as they know what works and what not in the niche market through specific channels. It helps in seizing a competitive edge for the long run.Wrap upMulti-channel marketing is no more an abstract concept about which businesses are unaware of. It’s providing unheralded opportunities from huge conglomerates to SMBs to enjoy significant results with a 360-degree view of customers.The brands that are still resisting and taking the back seat, then plugging in with the customers, offering the customers what they would love to have, and boundless growth is implausible.Note: It’s ideal to launch multiple marketing campaigns across various channels but maintained and managed in a coordinated way under the hood. This, in turn, helps in proper scheduling, right execution, and precise evaluation of all the campaigns across different channels. Follow the same way.What’s your take? Want to create orchestrating multi-channel marketing campaigns to change the wind of sales and ROI? If so, get connected with top digital marketing companies that help you with the right tools, strategy, and additional tips.

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