Incisive market commentary from David Morrison

Stay ahead with our market commentary and webinars from our in house market strategist

Open a Live AccountOpen a Demo Account
+ Show blog menu



Collapse 2017 <span class='blogcount'>(348)</span>2017 (348)
Expand November <span class='blogcount'>(26)</span>November (26)
Expand October <span class='blogcount'>(24)</span>October (24)
Expand September <span class='blogcount'>(33)</span>September (33)
Expand August <span class='blogcount'>(26)</span>August (26)
Expand July <span class='blogcount'>(32)</span>July (32)
Expand June <span class='blogcount'>(28)</span>June (28)
Collapse May <span class='blogcount'>(35)</span>May (35)
Tory Poll Lead Narrows Sharply - Video Update
31 May 2017
S&P 500 and NASDAQ break winning streak
31 May 2017
Sterling swings on polls - PM Bulletin
30 May 2017
Equities drift after long holiday weekend - AM Briefing
30 May 2017
Crude oil slumps on OPEC disappointment - AM Briefing
26 May 2017
OPEC disappoints while FOMC minutes provide cheer - Video Update
25 May 2017
OPEC expected to agree 9-month extension - AM Briefing
25 May 2017
Look-ahead to OPEC - Video Update
24 May 2017
Markets quiet ahead of FOMC minutes and OPEC - AM Briefing
24 May 2017
Crude oil update - OPEC meeting in focus - PM Bulletin
23 May 2017
Markets shrug off atrocity in Manchester - AM Briefing
23 May 2017
Equities mixed, but supported by oil
22 May 2017
Nerves steady after firmer close on Wall Street - AM Briefing
19 May 2017
Political fall-out continues to weigh on markets - Video Update
18 May 2017
Slide in European indices accelerates - AM Bulletin
18 May 2017
Trump’s woes hit markets - Video Update
17 May 2017
Trump’s woes lead to market wobble - AM Briefing
17 May 2017
EURUSD hits six-month high - PM Bulletin
16 May 2017
Crude oil extends rally - AM Briefing
16 May 2017
US inflation data and retail sales in focus - AM Briefing
12 May 2017
Crude oil recovers after “flash crash”- Video Update
11 May 2017
Crude oil soars while equities drift - AM Briefing
11 May 2017
Are investors too complacent? - Video Update
10 May 2017
Investors rattled after Trump fires FBI head - AM bulletin
10 May 2017
Crude oil’s “flash crash” leads to OPEC desperation - PM Bulletin
09 May 2017
Equities rally as oil steadies - AM Briefing
09 May 2017
Forex: Top Ten Tips for beginners - Trading Guides
08 May 2017
Markets little moved after Macron win - AM Briefing
08 May 2017
Payrolls in focus - AM Briefing
05 May 2017
NFP look-ahead - Video Update
04 May 2017
FOMC hints at rate hike in June - AM Briefing
04 May 2017
FOMC look-ahead - Video Update
03 May 2017
Apple disappoints on sales numbers - AM Briefing
03 May 2017
CFD Trading Tips - Trading Guides
02 May 2017
European traders return after May Day - AM Briefing
02 May 2017
Expand April <span class='blogcount'>(31)</span>April (31)
Expand March <span class='blogcount'>(38)</span>March (38)
Expand February <span class='blogcount'>(36)</span>February (36)
Expand January <span class='blogcount'>(39)</span>January (39)
Expand 2016 <span class='blogcount'>(483)</span>2016 (483)
 Tuesday 02 May 2017

CFD Trading Tips - Trading Guides



1. If you’re new to CFDs then make sure you only make small trades to begin with. All CFDs are traded on margin which means that you only need to put up a small percentage of the value of the underlying position to take on significant risk. So start off with small trades, and make sure you understand what is meant by a single CFD and what the minimum price fluctuation is. This can be quite different for CFDs on individual equities or currencies, for example.

2. Work out what kind of trading suits you best. There are traders who only ever take short-term positions, maybe for only a few hours, and who would never hold a position overnight. This type of trading may appeal to you, but do you have the time to follow the markets closely every day? If not, then taking a medium to long-term approach could suit you better. Short-term traders tend to prefer range-bound markets while longer-term traders look out for trending markets.

3. Only trade with money you can afford to lose. It is every trader’s aim to be profitable. But the very nature of trading is that the market doesn’t always behave as one would like. So it is important to understand that everyone gets it wrong from time to time, especially when they are starting out.  That is why it is so important to carry out strict money management. This involves dividing up your risk capital into small tranches and then use stop losses to reduce your market risk.

4. Develop your own trade ideas and don’t be tempted to take a position on the basis of a tip from someone else. By all means, use tips as the starting point for further investigation, but make sure you do your own homework and that it’s thorough. There are rarely any reliable short-cuts when it comes to successful trading, so try and come up with your own ideas. These can come from carrying out research or looking at developments in your immediate environment.

5. Study charts. Look at how prices move and try to identify patterns. See how charts of liquid markets such as the major stock indices and currency pairs differ from illiquid ones - such as the stock price of small companies. Practice using drawing tools to help identify areas of support and resistance. Popular ones include Andrews’ Pitchfork and Fibonacci Retracements. Use obvious support and resistance levels as bases for entering positions, taking profits and running stop losses.

6. Back up with technical indicators. Drawing tools are vital when it comes to identifying significant trading levels. However, it’s important to back these up with technical indicators which can help you identify such important factors such as changes in momentum, or whether a market is oversold or overbought.

7. Plan your trades. The more you can do to take the emotion out of trading, the better. For this reason most successful traders use rules-based strategies to enter and exit positions. This is particularly important when it comes to choosing stop-losses. You should never open a trade without knowing exactly where to place an appropriate stop loss. And once this stop is in place, you should never move it further away. Discipline in risk management is vital for a successful trader.

8. Don’t chase a market. If you miss your entry level and the market gallops off, don’t go after it. It’s frustrating, but jumping in late can lead to losses. Either wait for a significant correction or let it pass completely. There will always be another trading opportunity so have patience. Don’t be tempted to override your rules for the sake of being in the markets.

9. Don’t add to a losing trade. When a market moves against you it can be very tempting to “double-up” - that is, add to the losing position. The thinking is that with twice the amount riding on the market you can make back unrealised losses twice as quickly. But the reality is that in most cases you will end up losing more than you planned. So don’t double-up, or move your stop further away or do anything to change the trading plan that you put in place BEFORE you started losing money and your emotions kicked in.

10. Never forget: there are two types of capital – monetary and mental. Always plan your trades and use risk management tools to protect both. The last thing you want is sleepless nights because a market is moving against you and you haven’t taken action to limit your potential loss.


Spread Co is an execution only service provider. The material on this page is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by Spread Co Ltd or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.


Posted by David Morrison

Tagged: Trading Guides

Category: Trading Guides

1 comment

Add a comment Add comment            


© 2018 Spread Co Limited. All Rights Reserved.

Spread Co Limited is a limited liability company registered in England and Wales with its registered office at 22 Bruton Street, London W1J 6QE. Company No. 05614477. Spread Co Limited is authorised and regulated by the Financial Conduct Authority. Register No. 446677.

Spread betting and CFD trading are leveraged products and can result in losses that exceed your deposits. Ensure you understand the risks.

Losses can exceed deposits. Click here to learn more.