If you want to start trading CFDs there are a few things that you will need. However, one of the biggest advantages of CFD trading is that you don’t need too much and it is very accessible and pretty easy to get started.
1. Some Money
If you want to start trading CFDs for real (after running a demo account or “paper trading” then you are going to need some money to trade with. The good news however is that in order to start cfd trading you do not need a massive amount of capital. That is because some brokers offer the ability to trade at a levels of £0.50 per point.
2. A Computer with an Internet Connection
In the good old days of trading a lot of trading was done via dealing desks and over the phone. However, most CFD brokers now supply on-line trading platforms that can be accessed via the web or fully downloadable software that you can install. The demands on the computer will not be massive but having a solid reliable internet connection will be a must so you can monitor trades and react to real time market action.
Most CFD brokers now supply on-line trading platforms that can be accessed via the web
3. CFD Broker
In order to trade CFD you will need to find and select a CFD broker. The broker will execute trades on your behalf and give you access to the relevant markets, live market prices and a trading platform. Most brokers now offer complete packages that will give you everything you need to get started. We have put together a broker review section to get you started and look at what some of the top brokers have to offer.
4. Some Knowledge & Experience
Before you get stuck in and start using your hard earned cash to start CFD trading, we highly recommend that you get some knowledge and experience.
There are lots of great resources out there on the web (like us) but you can also read through some books, attend some seminars all sorts. You could check out our reviews section on our site for some ideas.
A lot of CFD brokers also offer demo accounts where you can practice with real time market data on their systems using virtual funds. This is sometime known as paper trading. There are some software packages that offer paper trading without having to sign up with a broker.
5. A Trading Plan
So a trading plan isn’t essential but we highly recommend that you start working on one as soon as possible. A trading plan is a structure, or a set of guidelines, that will help define your trading activity. It can be an extremely useful tool to help you focus on planning and executing your trading strategy.
Plan the trade and then trade the plan…
There is no absolute blueprint for the perfect trading plan every trader will be unique, and different styles suit different traders. However there are certain universally accepted elements to consider when building your own plan and we have put these together some helpful hints and tips to get you started.
6. A Trading Strategy
A trading strategy is a fixed plan that is designed to achieve a profitable return by going long or short in markets. The main reasons that a properly researched trading strategy helps are its verifiability, quantifiability, consistency, and objectivity.
You will come across lots of different strategies and techniques which can be utilised in your CFD trading. At www.contracts-for-difference.com we are big believers in keeping things simple, defining a strategy that you are happy with and that works and stick with it!
In Summary…
While it would be possible to drive straight in and start trading CFDs it is worth taking a little time to think about what you want to trade and how you want to trade. Also, make sure you do your own research and remember to trade what you see not what you want to happen…
