Top 7 CFD Trading Strategies & Tips, Which Can’t Be Avoided

CDF Trading StrategiesTraders who engage in making random trades don’t get far. Astute traders rely on coherent CFD trading strategies. These are traders who follow basic paradigms from the first day of trade.

CFD strategies employed by traders encompass in two main categories; Fundamental and Technical categories.

Fundamental Category

Fundamental traders call for scrutiny of any company fundamentals in any given industry. Some of the factors worth checking include:

  • What’s the company’s position?
  • Who sits on the management team and what are they known for?
  • How does the company’s cash flow look like?
  • What is the return value of the corporate’s assets?
  • What is the track record and history the company has in regards to retaining profits that fund growth in the future?

Fundamental trading strategies come into effect when traders engage in buy-and-hold trades in the long term.

Technical Category

Technical trade strategies devolve further into two sub-types; mechanical and discretionary.

Range Trading Strategy

Mechanical trades end up as the flavor for Range Trading.These are strategies that follow the set and forget trading rules programmed to take effect automatically.

Discretion Trades Strategy

These are trades that are exciting, dynamic and active. The trader uses analytic tools for the purpose of spotting emerging trends. The trader uses his/her intellect to conduct profitable trades. As a trader, using analytical tools gives you an insight look into future price movements. You will need to learn how to get the best analytical tools and how to use them to your advantage.

CFD Trading StrategiesNow that we know the basic , let’s delve further into effective ways to utilize more strategies:

Trend Following Strategy

Trend Following is a long-term strategy which has similar characteristics to buy and hold trading strategies. With Trend Following, Wave Theory helps the trader identify a particular trend.

Experienced traders term Trend Following as a long-term strategy which aligns with the long-term buy and holds strategies. By using this strategy, traders hold on to their stock for months as they ride a price trend to its conclusion.

Using a Wave Theory strategy, traders can quickly identify a pattern.  With this information; you can purchase additional shares as the price will fall before it skyrockets again. Afterward, you can close your position when the wave reaches the ultimate peak.

However, the trader doesn’t actively purchase or dispose of when prices spike upwards. He/she concentrates on buying more shares when the prices start going down and closes his/her position when the wave reaches the ultimate peak.

News Playing Strategy

News Playing is composed of opportunistic trades. By looking at the trending business news, it takes little effort to imagine the direction of the stock price of a big corporation heads after a breaking news story.

Traders using the News Playing approach will short the stock almost instantaneously. Traders tend to sell out before the prices plummets, and they choose to purchase shares back closing out their position after a remarkable price drop.

Using the above strategy, a trader makes a profit when they spend fewer amounts of the commissions and fees. To take advantage of the News Playing strategy, traders keep track on the news and their patience helps them cash in current affairs.

Spread Trading

Also known as scalping spread trading is one of the most active trading strategies. The trader is capable of identifying small but significant opportunities in the difference the asking price and the bid of a company’s stock.

The dealer exploits the gaps the soonest he/she finds them and in return, he/she will reap in a steady pile of small gains all through the day. With these CFD Trading Strategies, traders stand to make significant trades every day!

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