10 Golden rules of CFD trading

1. Know your market

Choose a market that you understand. This will help you to take clear views on the direction of price movements. It will also help you to research your trades using the news and charting tools available through the secure area of our website, found at http://www.cityindexasia.com/.

2. Have realistic trading targets in place

A trading plan should provide a general set of rules which you can refer to.The plan might specify things such as:
- Profit goals (per day, month, year)
- Maximum losses you are prepared to take
- Size of the trade at any one time
- Entry/exit point

Without a set of rules, emotions such as greed, fear and hope may take over and lead you to make irrational decisions. Of course, as you become more confident, these rules can be changed and adapted to any new strategy you may wish to adopt.

3. Don’t overtrade

Trade within your financial means. Don’t use up your entire margin with a single opening trade, and always have extra margin to cover your position should it go against you.

4. Cut your losses

In a losing situation, it is easy to let losses accumulate in the hope that prices will turn around. By getting out of loss making positions early, you will avoid losses getting too large.

5. Use closing orders (stop losses) to manage your risk

You can place closing orders (stop losses) on trades both online and over the telephone to help minimise your losses.

6. Expect losses

Even the best traders in the world get it wrong. Analyse your losing trades and learn from your mistakes. Don’t get emotionally attached to your trades.

7. Be disciplined

Do not let emotions take over – stick to your rules. Consider the appropriate levels to take profit and losses.

8. Don’t put all your eggs in one basket
Trade a variety of markets to spread your risk.

9. Don’t trade on rumours

Have your own opinion about every trade so that when you are ready to trade you will be confident that you have taken a valued and considered view.

10. Keep informed and up–to–date

Make use of all the resources available to you to maximise your understanding of the markets. The City Index Internet Trading Platform is constantly updated to give you the latest news and information from well respected news providers.