8 Steps to master short-term trading strategies for CFDs

Know your market

Before you start trading, you need to know what markets are available. It will enable you to understand more about the potential paths the market could take, giving you a better chance of predicting how it might move (view website to find out more).

Join the trend

The first step towards mastering short-term trading strategies is identifying trends in the market. No trader can hope to succeed by joining random trades or catching jumps on the price charts. You can only hope to get a positive result by knowing the market’s direction. As a general rule, the short-term trends tend to last for just three or four hours, so your trading strategies should accommodate this time limit.

Trade in the right direction

Once you’re clear on where the market is heading, you need to ensure that your trades are placed in the correct direction. Sometimes, people hold off opening trades until they see some confirmation of what they think might be happening in terms of the price charts. It’s not always wise since there will be times when putting your money on something before any natural movement has taken place could lead to severe losses. 

However, waiting for confirmation is often a good idea since you can avoid making trades if the market doesn’t show any signs of following through.

Keep your capital safe

Your trading strategies should always include plans to safeguard your capital if things go wrong. It means having an emergency fund that you can use to ride out any period of bad luck, so you don’t have to take even more risks by borrowing money or using credit cards. For example, that could lead to even more significant problems. If you are running short-term strategies, keeping your capital safe is essential as it enables you to continue working without incurring too many losses.

Pay attention to fees & commissions

Please take a look at all the fees and commissions that come with CFDsto ensure that you are fully aware of what they are. For short-term trading strategies, it’s essential to think about the charges in advance so you can see how much money will be leaving your account if you carry out specific trades. It could affect the feasibility of each transaction before you go ahead with it and lead to higher fees than expected which would eat into your profits quite considerably, so make sure to consider this at all times before opening any trades.

Make sure you can close out trades

Being able to close out trades is one thing that many traders tend not to consider when setting up their short-term trading strategies, but this can leave them open to losses or having incomplete portfolios depending on whether they have closed them with a profit or not. If it is possible to quickly trade out of the markets, you can avoid taking too much risk with each transaction, which could help you manage your cash flow more effectively.

Master support & resistance

Support and resistance levels are essential for setting up effective short-term trading strategies since they provide context for the higher timeframe trends, which most people use as a basis for their long-term trades

When thinking about support and resistance levels, always work out how far the price has come from those areas before determining whether there is a difference or not. It will help to give you a better idea about what might happen next so that you can place your entry points more carefully.

Maintain your objectivity

Trading CFDs should never become personal so try not to get emotional when thinking about your returns or losses. It could cloud your judgement leading to further losses or missed opportunities. It’s essential to keep your emotions out of it as much as possible so that you remain objective when making decisions instead of having your judgement clouded over.

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