Advanced CFD traders have to overcome many challenges before they become successful traders or reach any profitability.
This article looks at four fundamental problems that new traders face when they first begin their careers in CFD Trading.
Why Don’t I Win Every Trade?
Many novice traders enter the market overconfident about their ability to predict future price movements and with a false sense of what it means to be a “winner”.
These assumptions can make a losing trade even harder to swallow for a new trader who expects himself always to know where the price will go next.
It is one of the most common problems for novice traders, and they can overcome it with a more realistic sense of what trading means.
Many new traders expect to profit from every trade, leading them to adopt a gambling mentality when they first enter the market.
Trading is not gambling, but many new traders have a similar approach to the markets where they assume that their “intuition” will lead them to success.
When Will I Become Profitable?
Many novice traders are under the impression that they need only stay in the market until they reach profitability, making it difficult to understand why some veteran traders remain unprofitable after years in the industry.
To gain significant profits in Forex, you need patience; allow yourself enough time to learn and practice your craft until you find a trading style that suits you.
Remember, no “newbie” secret or magic strategy will allow you to exploit the market and guarantee success.
There are no shortcuts to becoming profitable. You should also follow investing economic calendar.
I’m Not Scared Enough
For novice traders, it can be challenging to view losing trades as part of the learning process, so they often skip over them and consider them “bad luck”.
Though this may sound like a good idea, in theory, every failure presents an opportunity for growth as it serves as a healthy reminder of what can go wrong if proper precautions aren’t taken.
To become a better trader, you need experience, which means that it’s essential not to be discouraged from making mistakes by fear of loss.
I Don’t Know What To Do When The Price Moves In The Opposite Direction.
When a novice trader’s strategy is no longer working, he tends to become frustrated and abandon it in search of a new system or method for trading.
The problem with this approach is that you will often abandon good strategies in favour of inferior ones simply because they prove more profitable at the time.
To become a better trader, you need discipline.
It means learning not to be emotional about your trades and having patience enough to stick to your strategy when it doesn’t seem like much is happening on screen.
The two best CFD strategies for beginners
1. Get a mentor
CFD Trading is more complex than it may seem, and most new traders make the mistake of thinking that they know what they are doing when they have no idea what trading is all about.
To become profitable, a trader needs a mentor who can help them overcome some common pitfalls that novice CFD traders face daily.
The best strategy for overcoming this problem is to find somebody who already trades successfully and ask them to show you the ropes.
Many successful Forex brokers will be more than happy to oblige if you provide them with an account where they can deposit funds so that you can practice their strategies.
2. Keep the risk to your account at 1%
When you are new to CFD trading, you must keep the risk on any one trade as low as possible.
If you have funds in .5% lots, then every time you enter a trade, you are already risking half of everything in your account, which can be too high for beginners who have not yet developed the proper discipline.
You can avoid this problem by using micro-lot accounts with just 10 or 20 pips risk per trade.