Employing a strategy in trading CFDs is like going to a battle with full armor. Since money is involved, of course, there are risks associated with CFDs, and trading with a strategy is the best thing that you can do to overcome these risks.
Range Trading
Involving the use of range in trading, range traders try to predict the asset’s movement. Calculations in range trading are based on the market resistance levels and market support as they will provide positive or negative figures which get added to the current price of CFDs.
Contrarian Investing
This trading strategy is reliant on the idea that charts and stock patterns do not last forever. Using this method, you are hoping that changes in trend will happen such as chart trend going up. If your guess is correct, then you will have a good opportunity to earn from it. The best way of finding the counterpoint is through the use of wave theory as well as other technical indicators that are used and made available by CFD traders. Although it is a risky strategy, it also corresponds to high rewards.
Trading Breakouts
Trading breakouts is a strategy most used by beginners and quite popular among retail traders. Just as its name suggests, it uses signs of a breakout when entering a trade. You should monitor the market for the critical price and by the time you achieve that particular key price, you then sell or buy.
Breakouts are when the price of the financial asset exceeds the market support levels or the market resistance. Determining market resistance and support is easy thanks to the technical indicators like pattern lines and chart lines.
Trend Trading
It makes use of different technical indicators that help determine the trend direction. Upon having the trend direction, you just have to ride that wave no matter how long it takes as long as you are making gains.
Swing Trading
Swing trading uses sudden spikes in the opposite direction, just like in contrarian that mainly relies on the counterpoint. Their only difference is that swing trading takes on a longer scale.
News Trading
News trading uses macroeconomic data in the financial world. There are different kinds of announcements that could create changes in the price of your underlying asset.
Hedging
Hedging involves betting on trades that are against each other. You make one trade and it should hedge against the other just so your trading capital won’t be lost.
Having a Trading Plan
A detailed guide on how you should properly behave in the market is the main content of a trading plan. It contains your loss and profit benchmarks and when you should enter and exit the market. Inside the trading plan, you must have a detailed outline of the hours that you should be spending in the market. You can write your trading goal applicable for the entire day, week, or even a whole month. A solid trading plan removes all hesitation and unnecessary emotions while you trade. Testing your trading CFDs plan in a demo account is also highly recommended.
