CFDs Trading Plan

The best tip that anyone can ever give you, is to create a good CFDs trading plan that suits you.

What is trading about? Making a profit and going to the beach, spending all day in front of the computer begging for a profit or following a trading plan!

Trading is about having a solid plan and be religious about it. While a plan may work or not it will depend upon individualities, not everyone will execute and implement the same plan equally.

When doing a CFDs trading plan, it is important to have a methodology and objective which has to be realistic and achievable. It is best to overachieve than underachieve and get frustrated about your plan. Do not have high expectations. Start your trading with a small target.

Next, you should figure out how to get there. For CFDs trader the best option is to follow and understand chart analysis. So choose your tool and write down what indicators will you use and how this indicator(s) will show you the entry and exit point.

One of the most important parts of a CFDs trading plan is to define your budget. Your budget should be unneeded money in your daily life. Is money set aside to try out your system, to experiment and/or to practice.

Objective of the trade: $ 200 profit per trade.

Method: Trend following

Tools: Moving Average, MACD, Patterns and other indicator define then and have samples.

Budget: $3000 initial outlay, $3000 surplus/free equity

Over the time I have found that a CFDs trading plan have to really get into details. Many traders would take it lightly. Every step in a planning process has its importance. For instance when entering a trade I will not place my full order at once. It is true that it may incur in more trading commission to pay, and other may call it loss compounding or averaging down. I disagree, for me this will only happen until I have finished entering my trade. If I going to go long in RIO TINTO with a total of 700 CFDs, I will split it up in different lots of 150, 100,75,50 and 200. So it is important to define where my first and last entry point or price is and with how much will I start. Either way, up or down the trend.

Exiting a trade shall be as simple as closing it, but there are thing that you can do if you want to maximise your profit. I particularly prefer to close it at once. If it has reached the target I will prefer to not let greed take control. Again, it all depends, sometimes it is the right thing to maximise profits and why not?

Stop loss, trick or saviour: At what price? Whatever type of trading you choose, day trading, weeks, trend or gap trading, you most probably would like to enter at the right time, therefore, entering a trade would not be straight forward. Mostly after entering a trade 80% of the time prices would move against you. It is just nature of the market or perhaps your broker is betting against you and has push down the price a bit. But if you are right and price turn on your favour, them, thanks to your patient you would like to have a proper cushion and set your stop loss up to 20% of your trading budget.

One other thing that it is essential is to learn from previous mistakes, and this should be reflected in your CFDs trading plan, give room for improvement and have option within your plan. For instance markets can push trends in any direction any days, so if you are a gap trader, you could be expose  to a number of option.

The better you plan, the better your trade. Be patient and disciplined with your plan.

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Risk warning: Your capital may be at risk. CFD trading is suitable for experienced traders and not beginners.