Today we’ll have a look at how to buy Contracts for Difference and if you have been a little worried about how they work you can rest assured they are a simple product that you’ll understand with great ease. If you have ever traded stocks then you will understand CFDs very quickly.
- Setting up your CFD account.
This is by far the easiest part of the equation and there will be many CFD brokers who will be keen to look after your CFD business moving forward. Often you’ll find they provide excellent incentives and complete CFD education available for free. When starting out stick with the main CFD brokers in your country and you won’t go too far wrong. online contractSetting up an account means you’ll need to fill out an application form in writing or online and accompany those forms with certified copies of your drivers license and bank statement as a general rule.
- Open and fund your CFD Trading account – Within 24 hours
Once your account is approved by your CFD broker they’ll ask you to fund your account which is pretty straight forward. You can BPAY, electronically transfer the funds or pay by cheque. Some CFD provides will required as little as $500 and some will require up to $5,000. Either way its pretty straight forward and when starting out most don’t have any monthly fee’s associated with the account so your money will stay there unless you begin trading. Filling out the forms and funding your account can sometimes all be done within 24 hours and you are now ready to trade.
- Selecting the right position to trade
Now comes the fun part. You need to decide what you are going to trade. Many CFD traders and Forex and Futures traders use Technical analysis or fundamental analysis to make their trading decision. As Eva Diaz found out in your Real Traders 2 book (when she interview the top CFD traders in Australia) that everyone used their own strategy which included both technical analysis and fundamental analysis. There is no right way here and its always best to stick with your strongest skill set and go with what is easiest for you in the beginning. Your CFD strategy usually changes as you gain more real trading experience.
- Plan your trade and trade your plan
Now it is time to take action and place your 1st CFD trade. Many find its nowhere near as daunting as they first thought. Remember to keep your risk very, very small initially as you are just getting your feet wet. You can always increase your risk as your bank balance and confidence head in the positive direction.
As you can see, getting started and placing your first CFD trade is very simple. Trade small initially and you’ll be fine.