CFD Trading Strategies - Using Leverage WiselyBy Ashley Jessen | 02 March 2010, 18:35 BST
CFD Trading Strategies are designed to get you to use your money in the best possible manner and have your money working much harder for you. When it comes to CFD trading Strategies its important to use CFD leverage wisely or else the results can be devastating. Today we'll take a look at using your leverage wisely and if fact begin at the most basic level.
Zero leverage when starting out
By far the greatest advantage of CFD trading is the ability to access high levels of leverage and get your money working very hard for you. Unfortunately this is a double edged sword and as your increase the amount of leverage on your account you also increase the amount of risk that you are taking on. The most sensible plan initially, when trading any leveraged product, is to keep your leverage to the absolute minimum. You may want to consider trading with no leverage at the outset so you have no more risk than a standard share trading account.
Building it up in small steps
Trading with zero leverage initially will enable you to dip your toe in the water and experience CFD Trading at its most basic level. Once you gather some experience you can begin to increase the amount of leverage that you are using but make sure that you don't exceed more than 3 times your account size. That means with a $10,000 account you shouldn't be trading in excess of $30,000 in total position size. In your first year of trading your goal should be to break even after all your expenses including brokerage and training costs etc and if you keep your leverage small you'll give yourself the best chance to protect your downside risk. Anything on the upside is pure cream.
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/.
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