Planning Your CFD Trades and Trading Your Plan

LONDON, May 16, 2012 /PRNewswire/ --

It's been said that failing to plan ahead when trading CFDs is equivalent to planning to fail. Many successful traders would agree; often demonstrating how thorough research into their chosen markets and a sold trading plan can lead to potential CFD trading successes.

In this short series on planning your trade and trading your plan, we will start with a basic trading plan that could be put together by asking a few questions.

CFD Trading to Suit You

We talked to a number of active and successful traders with City Index Australia who shared their experiences when they were just new in trading.

"I was getting tired of the corporate environment and I wanted to spend more time with my family and have more balance in life," said a CFD trader who now uses her own trading method that suits her chosen lifestyle.

She said one of the questions she asked herself early on was: "What is the ultimate reason for my trading?"

Why you should trade CFDs

Trading CFD is a high risk strategy and not suitable for all investors and you may not own the underlying asset.

While most people would readily say they trade to make money, there are others who don't have a clear goal or reason for their trading. Your trading plan should have a specific answer to the question, why do you want to trade CFDs?  It could be to supplement your current income or to get you started as a full-time trader after a certain period of time.

"I love my job despite the busy schedule and heavy workload. But I am very much interested in the markets. Because I can dedicate time to trading only when I get home, I have decided that I will be a medium-term end-of-day trader for the first few years of trading," said a part-time trader who uses the City Index trading platform to trade shares, indices, currencies and commodities.

Time Management

How much time can you dedicate or allocate to your trading is another important question you need to address in your trading plan. Be as realistic as possible given your current work commitments and long-term goals.

Summary

These are just some of the basic questions or items you need to consider as you put together your trading plan. In the next part of our series, we will be sharing information about a detailed CFD trading plan and what should it contain.

Trading CFD is not suitable for all investors as it carries a higher element of risk and you may not own the underlying asset.

About City Index Australia:

Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.

City Index is a leading global provider of margined foreign exchange and CFD trading. As a group, we transact in excess of 1.5 million trades every month for individuals in over 50 countries worldwide. To learn more visit: http://www.cityindex.com.au/

SOURCE City Index Australia