With all the buzz in the newspapers and magazines about trading Contracts for Difference (CFDs), the common question is 'How do I get started trading CFDs?' Keep in mind that a Contract for Difference is exactly like trading shares except you need a small amount of money up front and some subtle differences like the ability to short sell and the fact that you need to pay CFD finance.
Do I need to have traded stocks prior to starting trading CFDs?
Many traders jumping into the market for the first time (noobs) often wonder if they should have experience with shares prior to getting involved in trading a leverage product like CFDs. Ideally you should have some experience prior to trading any leveraged product and that experience should revolved around using sound risk management (risk aversion) and the ability to place and implement stop losses.
But I do I have the control?
Always keep in mind as a new CFD trader you can control the leverage on your account. You never have to use leverage if you don't want to but instead you could treat your CFD account like a share trading account by only ever exposing yourself to the total sum of your capital. For example, if you have $10,000 in your CFD trading account you might like to trade no more than $10,000 in total positions. This means you are using zero leverage and you have no more risk than a standard share trading account (unless you are shorting). If you combine zero leverage with sensible stop losses you'll find you can gain some great experience, minimize your risk and generally experience lower brokerage.
Grab your balls and racquet and let's play...
Now we've got some of those basics out of the way it's time to get serious and put your money where your mouth is. Grab a trading magazine off the bookshelf and locate an ad for a CFD broker and make enquiries to open the account. Opening an account usually requires filling out an online form and providing a copy of your drivers licence and or a recent bank statement. This approval process can take minutes to several days depending on how stringent the CFD brokers criteria are.
Time to dust off the wallet and clean the cobwebs
Once approved the CFD broker salesperson will ask you to fund the account. Normally you can do this with between $1,000 - $5,000. Make sure to put enough money in the account to meet your position sizing and financial goals. From here you can either download their trading platform to place your trades or phone your orders through. Pretty simple really. Now the fun begins.
Action: Discover the 7 most Critical CFD Trading Tips and 2 of the most common CFD Trading Strategies. Learn more about the Contracts for Difference (CFD) revolution by going to http://www.learncfds.com/
Article Source: http://EzineArticles.com/?expert=Ashley_Jessen
Jumat, 12 Maret 2010
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