CFD Trading offers investors a powerful, flexible way to trade global financial markets, offering a great degree of choice and plenty of trading opportunities.
Before getting started it is crucial that you understand how to place your first CFD Trade, as well as reviewing some of the risk management tools available to you to help protect yourself against market volatility.
Deciding on the right market to trade and having a clear trading strategy in mind is key to successful CFD Trading. Our easy to use guide to placing your first CFD Trade will help you decide on the right market for you, teach you how to identify the best time to enter the market and look at the tools available to you to help ensure you manage your risk responsibly.
Get started with CFD trading
How to select the right market for your strategy
At ETX you’ll have huge choice in deciding which markets are right for you and an important part of your trading strategy will revolve around identifying the market opportunities that best suit you trading plan. Like with any form of investment, research and analysis is critical when it comes to choosing the right market to trade and the best time to open your position. Ensure that you have a deep understanding of market trends, sentiment and volatility before you decide to trade. Identify the issues and events which could drive price movement and determine how this may impact your trading decisions.
Decide the size of the position you would like to open
Before entering the market, decide on the amount of CFDs you want to trade and how this fits into your available trading budget. Your profit or loss will either rise or fall for each point the market moves in either direction. For example, if you open a Buy position of 5 CFDs on the UK 100 at 6800, and the price rose by 10 points to 6810, your profit would be equal to 5 x 10. Remember, because markets can both fall and rise, the opposite is also true and you would lose the value of your position for each point the market moves against you. When deciding how much to trade, be realistic about how much you have to invest and don’t overleverage yourself. It is very important that you have sufficient margin in your account to cover your positions.
Decide which direction to trade in
Your market research and analysis will help you get a feel for current sentiment within the market you wish to trade. Your research will also help you better understand medium to long term trends which will determine whether you decide to open a Buy (long) or Sell (short) position on the market. Make sure that your decision is validated by your overall trading strategy and that the estimated timeframe over which decide to trade is consistent with your short, medium or long-term goals.
Placing your trade
It is important to remember that when you trade CFDs, you are trading on leverage and while this can magnify your profits it also increases your potential losses. When you trade CFDs at ETX we’ll give you a range of powerful risk management tools that help you trade at a level of risk that you’re comfortable with. Our award-winning TraderPro platform makes it easy to choose the price point at which you’d like to open a position in either direction and there are clear options for adding stops and limits to protect against volatility. When you’re comfortable with the price and direction you have chosen, and once you have attached a stop or limit order to your ticket, click or tap the Trade button to open your position.
Monitor your position and stick to an exit strategy
Once your position is live it is crucial that you monitor your trade, as well as keeping up with market news, relevant data releases and macro events which could impact price movements. When you trade with ETX, our fast, powerful trading apps for iOS and Android will allow you to monitor your position whenever you want and wherever you go. This means you’ll never miss a trading opportunity and can react to market moving events as they happen for greater peace of mind. Use our precise drawing tools, advanced indicators and specialist chart types to track market movement, define support and resistance and identify the most profitable time to exit the market.
How to decide on the right CFD market for your strategy
Deciding on the right market to trade is a crucial first step in building out a wider trading plan, and when weighing up your options is it important that you start with a market that you have some prior knowledge of or that you understand well from past experience.
Knowing how and why markets move and the potential events and economic factors that influence them is extremely valuable in helping you devise a successful long term trading strategy that consistently identifies relevant, profitable trading ideas.
When first starting out, familiarity with a market will go a long way towards making you feel more confident about your trading decisions and can help in analysing your performance.
At ETX you can choose from thousands of global markets across Forex, Indices, Shares, Commodities and Cryptocurrencies, so you’ll always have plenty of choice.
Deciding how much to trade and identifying the best time to enter the market
Deciding how much to invest in your position is a fundamental part of your overall strategy and may dictate how long you hold your position open for, how big or small your risk appetite is and the type of risk management tools which could benefit you the most.
Especially when first starting out, try to choose a trade size that is well within your budget and that doesn’t overleverage your account. Having enough margin to cover your position is important, especially if the market moves against you during times of heightened volatility. Because you’re trading on leverage, your profits will be magnified but remember the opposite applies too and should the market move against you, your losses will be amplified.
Choosing the best time to enter the market will be based on your research and analysis into how and why your chosen market reacts to events and news the way it does. By analysing current sentiment you can determine the optimum entry point into the market.
When you trade with ETX our powerful charts and drawing tools will help you identify key resistance and support levels to gauge market sentiment and range. A support level is a price level at which a falling market finds support and buyers, whereas a resistance level is the point at which a rising market tapers off and may not push higher.
You can use our pinpoint drawing tools and indicators on our powerful charts to define trends, support and resistance levels and chart patterns that may help you identify a change in market momentum and thus the ideal time to open a position.
Do you open a Buy or Sell position?
The very best financial traders and investors are also often exceptional at researching and understanding the trends that drive markets. A knowledge of why prices change, the ability to anticipate market movement and insights into how events and news may impact a particular asset all help in making better trading decisions more consistently.
Your research into market trends and sentiment before you open a position will guide your trading strategy and one of the first things you’ll need to decide is whether to open a Buy (long) or Sell (short) position. This will be determined by shifting market sentiment over the short, medium and long term and whether you feel the wider outlook for your chosen market is positive or negative.
Once you have identified a trading opportunity, you should act decisively and follow your trading plan rationale. Ensure that you have sufficient risk management measures in place and that you have a clear exit strategy in mind, as well as a firm profit target.
Exiting the market at the right time can be the difference between a losing trade and a profitable one. Your trading strategy will again give you a firm idea of when the right time to close your position is; this could be when your profit target has been reached or when a stop loss level has been triggered. The important thing is that you remain disciplined, locking in profits and not running losses further than you should.
Opening your position
When you are confident about the asset you’d like to trade and have identified the best time to enter the market, you’re ready to trade. Our award-winning TraderPro platform is intuitive to use with clear options in the trade ticket allowing you to select the amount of CFDs you would like to trade, choose a trade direction and attach and define stop loss and limit orders.
Monitoring your position and exiting the market
Once your position is live, it is important that you monitor market movement and price changes which could impact your trade. Be alert to potential market volatility and anticipate the effect of upcoming data releases and news events by staying on top of the latest research and analysis. Our powerful iOS and Android trading apps mean that smart traders can stay in control of their positions and see how they are performing on the move, reacting to major market movement as it happens. You can also open a new trade, adjust your current position or limits and close a trade directly from our advanced apps, giving you added confidence.