Is it truly possible to make money trading CFDs? This is the million dollar question that many traders ask themselves before, during and after getting involved in trading Contracts for Difference.
Making money with Contracts for Difference is easy
Nearly every trader you will come across that trades contracts the difference will have made money. The challenge with trading contracts the difference is not making money but instead hanging on to those profits and not letting greed get the better of your trading account.
One of Australia's largest CFD brokers held two separate trading competitions over different time frames and demonstrated the fact that making money with CFDs is not the hard part but instead overcoming greed in order to hang on to those profits is.
In one trading contest the leader had made over 2400% in five weeks of trading only to give back all of the profit (in excess of $150,000) and start eating into their trading capital. In another similar contest, run by one of Australia's largest CFD brokers, the leader had amassed over 10,000% profit in a couple of weeks only to finish on just over 4000% profit after a short six weeks of trading. This trader had originally given back some 6000% in profits. The mind boggles.
Did you truly come here to make money trading CFDs?
One of the most common sayings in the stock market is traders always get out of the market what they came for. As a result it is absolutely vital that you define your objectives clearly and set steady achievable goals in order to maximise your opportunities when trading Contracts for Difference.
Those traders who do make money trading CFDs I gently knows quite clearly defined goals, a well-established trading plan, trade within their limits and are able to remove their ego from their decision-making ability.
The Golden Rule of Trading Success
It is a well known fact that the golden rule of CFD trading success is to cut your losses off short and to let your profits run and for many this is a lot easier said than done. When defining your trading plan it's a great idea to ensure your wins are at least one and 1/2 to 2 times the size of your losses. Further to this, those that can make money consistently trading CFDs are fully aware of all the numbers related to their trading business.
Profitable CFD traders will be able to tell you their average win, average loss, percentage win, percentage loss and the expectancy and maximum drawdown of their trading system.
As you can see making money trading CFDs is a result of good common business sense including building a trading plan, trading within your means, removing your ego and knowing all the numbers of your trading business.
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