While technical analysis attempts to predict the future direction of a market by analysing historical price charts. Although you can use each form of analysis individually, it is common to use a combination of the two. Your position size is the total market exposure of your trade. When opening a new position, you should take into consideration your available capital and the amount of risk you are willing to take.

Every CFD trader should outline exactly how much capital they are willing to risk on each trade in their trading plan — and remember this is how much money you can stand to lose. Remember, CFD trading is leveraged, so your total position size will always be significantly more than your initial deposit, and you could lose more than you commit to a single trade. As a result, a common approach is to only risk a small percentage of your capital on a single trade, and to manage your risk with stops and limits. A common method of managing risk is attaching stops and limits to a position.

These pre-define the exit levels for your trade and can help protect your capital. A stop-loss order is an instruction to your broker to close your trade at a price that is less favourable than the current market price. Learn more about stop-losses. You can also place a limit close order, which closes at a level that is more favourable than the current market price.

This closes your trade after you have achieved a certain amount of profit, with the intention of protecting your capital from adverse market movements. As you embark on your CFD trading journey, start small. There are thousands of markets to choose from, so it is important to focus on markets that you are already familiar with or have an interest in. Once you have more confidence in your strategy you can begin to diversify your exposure across a range of asset classes.

CFDs are a great tool for expanding your trading horizons, as they enable you to gain access to declining markets as well as rising ones. Even though you may have stops and limits in place, it is important to frequently review your positions. This will help you to identify any issues or opportunities quickly and prompt you to act when necessary.

It is also important to make sure that you have sufficient capital in your account to cover the total maintenance margin required to keep your position open. If your account falls below the minimum level of funds, you will be placed on margin call — which could result in your position being closed if you do not top up your account. A great way of monitoring your positions on the go is to download a trading app. With IG, you can access a range of trading apps specifically designed for mobile and tablet devices, and get price alerts sent directly to you whenever there is a significant market movement.

A successful CFD trader will know that no matter how experienced you may be, you will always experience losses. What makes a trader successful is how they respond to these losses. The rule here is to remain focused and in alignment with your trading strategy by not acting on greed. You will learn over time when it is time to cut your losses, and get out of a losing trade. A demo account gives you the opportunity to experience live markets in a risk-free environment, at no cost.

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During your time exploring the demo account, make sure that you gain an understanding of the financial terms used and the markets that you have access to. If there is anything you do not understand, you can use trading courses — like those offered through IG Academy — to build a stronger foundation of knowledge on CFDs. While there are risks associated with trading CFDs, committing time to building your knowledge can give you a significant advantage and reduce your risk.

As we have discovered, finding your perfect trading strategy is an ongoing process that should be tailor made to fit your personality and trading goals. There is no end to your development, as even the most experienced traders can learn more. But if you follow these golden rules and stick to your CFD trading strategy, you will be well on you way to becoming a successful CFD trader. Sign up now.

CFD Trading 2021 – Tutorial and Brokers

In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk.

Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.

Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. Compare features. New clients: or helpdesk. CFDs are a leveraged product and can result in losses that exceed deposits. You do not own or have any interest in the underlying asset. The value of shares and ETFs bought through an IG share trading account can fall as well as rise, which could mean getting back less than you originally put in.

Trading Strategies | Forex & CFD Strategies | City Index UK

Past performance is no guarantee of future results. Please ensure you fully understand the risks and take care to manage your exposure. IG does not issue advice, recommendations or opinion in relation to acquiring, holding or disposing of our products. IG is not a financial advisor and all services are provided on an execution only basis.

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An accelerating momentum condition suggests that the trend is strong and likely to continue. The three primary trading signals that can be generated with the momentum indicator include the Line Cross, the Momentum Crossover, and the Divergence signal. Volume indicators show you the volume of trading in a certain index and its change over time.

This is beneficial because when the price changes, volume levels can give an indication of how strong the next move may be. Bullish moves on high volume are more likely to be maintained than those on low volume. Volatility indicators show you how much the price is changing over a given period. As we all know, volatility is a fundamental factor in the market, and without it, there would be no profits. But remember- volatility tells you nothing about future direction, just the range of prices.

Position trading generally involves buying and holding an index for a longer period of time.

1. Develop your knowledge of CFDs

This can be for several days, weeks, or even longer. As a result, a position trader is less concerned with short-term market fluctuations. Position traders will make far fewer trades than day traders, with each trade carrying a greater potential for profit. However, holding a position for a long time can also increase the inherent risk.

Position traders might take a position in an index before or even after a critical event, such as an NFP report or earnings season. Similar to day trading, trend traders attempt to profit from short to medium-term market trends that influence the index. Here, traders only need to take a bullish or bearish position, depending on wider, overall market sentiment.

So What CFD Trading Strategies do we use at TradingLounge?

When trading the trend , keep your position open as long as the trend continues. Apply stop losses and guaranteed stops to protect profits or reduce losses in the event the trend reverses. So, what is the best trading strategy when trading indices?

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The answer is that there is no definite answer to that question. The best strategy is simply the one that best fits your availability, style and personality. Therefore, each trader needs to have a trading routine to find the perfect trading strategy that works for them. Whether day trading, utilising a breakout strategy or applying technical indicators, always remember- using specific trade entries and reliable risk management methods will help you on your way to more beneficial indices trading.

Your end of day profits will depend hugely on the strategies you employ. Open your indices trading account at AvaTrade or try our risk-free demo account! Still don't have an Account? Sign Up Now. Indices Trading Strategies.