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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Business strategy can only work if a business strategy professional knows which business level strategies have to be applied to cut the competition and ensure success.
Can you establish a standard way with which the customers will prefer to shop forever? Of course not. Irrespective of industry vertical, sometimes, the customers like to purchase through a brick-and-mortar store, browse online and then shop offline, view an advertisement and buy impulsively, or buy directly through the brand app.The gist is there cannot be a one-stop solution that boosts up the customers coming from different geographies, background, and demographics to buy the product. What should the businesses do to ignite the customer’s interest? Implementing multi-channel or hybrid marketing is the best solution.Increasingly, businesses are counting on multi-channel marketing to get their brand message and product reach to the target audience through the plethora of marketing platforms. Winning the customers and earning the dollars by exercising multi-channel marketing makes sense. 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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.
Business strategy plays a major role in an organization. Without a proper strategy in place, the organization may fail to make the right decisions.
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