Avoid common trading mistakes when trading CFD
Everyone makes mistakes some times and mistakes in CFD trading is no different. Many experienced traders have made mistakes sometimes be it trading the instrument, buying instead of selling or even trading a quantity that is above or below the range of the capital the trader’s capital. The important thing here is to recognise these mistakes and find a way to avoid them in the future. The good thing is that most trading mistakes can be avoided by strictly applying a well-planned trading strategy to avoid common CFD trading mistakes.
Mistakes usually occur because of three things; no preparing for the trade, not having enough knowledge about the trade your making and not having the discipline to follow your trading plan and strategy. If you recognize these and try to prevent these three things from happening, you have a better change of not making CFD trading mistakes.
Although it is good to learn from your mistakes, it is much better (and more cost-effective) to learn from other trader’s mistakes. Below are some of the common mistakes we have come across (and unfortunately experienced ourselves) and our hope is that you can use them to not make the same mistakes yourself.
Too large a set of expectations
There are unfortunately a lot of people starting out with CFD trading with the hopes of make huge profits very quickly and think that they will make large profits from day one. Other new traders trade just because of the entertainment and excitement involved in CFD trading. Trading CFD’s with either one of these mind-sets will probably lead to unprofitable trades. A serious trader would approach his or her trading like company and if you are running a company just for the fun of it you are most likely going to fail.
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Here is a list of some of the most common mistakes a CFD trader can make:
Too many positions at once
Many new traders are excited about the many different kinds of trades that are available in their CFD platform and wrongfully opens lots of them at once with high leverage. This is a sure way of wiping out your account very quickly so do not do it. It is much better to have one or two profitable trades going then 20 trades what you can’t keep track of or even have done your research one.
Treat your trading like a business
And not like a hobby. Have fixed goals and budgets, make sure that your schedule your trading sessions and carefully monitor both successful and unsuccessful trades. Your attitude towards trading is what causes the majority of mistakes in CFD trading so keep close attention to yourself.
Know the difference between order types
A lot of trading opportunities can be missed by closing trades at the wrong time solely by using the wrong order type that is available in your account. Learn these by looking closely at the training section at your CFD broker and if in doubt, contact the broker support to make sure that you understand them.
We hope that this article on common trading mistakes has given you the information you need. The next natural step is to use the free educational material and free demo account that our recommended CFD broker provides: