HINT: TRADE THE FACTS
The same rules apply to CFDs as they do to share trading – In essence, theyre both about getting the direction of the instrument correct. Trading on rumours is a classic investor trait, which can often lead to losses as the event never materialises and the share price falls back.
HINT: DIVERSIFICATION
Overexposure in one particular asset class can quickly lead to losses (and gains). Diversifying your risk is well regarded amongst the most successful investors as the best way to reduce risk. Reducing risk can come in a variety of guises from investing in different sectors, taking short as well as long positions creating a market neutral portfolio and trading across different markets. The most popular way of diversifying is by taking a position in an index, as opposed to the individual constituents. This way the impact of a large movement in a particular share, or even sector, will have less of an impact. Although you should always place a stop on your positions, it is particularly prudent with more exposed portfolios.
HINT: DO YOUR RESEARCH
Most CFD trading firms provide a range of research resources including...
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