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5 tips to maximise your profits using CFDs
Leveraged products involve a high level of risk and you can lose more than your original investment. They are not suitable for everyone so please ensure you understand the risks involved and if necessary please obtain investment advice from a financial adviser before investing. This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
CFDs offer a simple way of increasing your profit potential. The purchase of traditional shares requires the full amount to paid for up front and in full (10,000 shares of company A at 100p, requires full £10,000 outlay). With a CFD, however, the initial outlay for an identical trade could be as little as £500. The reason for this difference in initial outlays lies in CFDs requiring only a deposit (as low as 5% for equities) for the trade to be placed. Whilst the outlay is lower the risk and reward remains the same as if £10,000 of physical shares were being held. The trader benefits/suffers to the same extent as the traditional shareholder but benefits from not having to part with the full amount at the outset. With trading being a serious undertaking, one which you will no doubt have put a fair amount of time and thought into, it makes sense, therefore, that you want your capital and trading lifetime to be as long and as profitable as possible. With this in mind, below are a few tips you should bear in mind when trading. Accendo Markets’ clients are provided with as much assistance as they require in order to help them make their own trading decisions. One of our most popular pieces of educational material includes a list of rules which most find beneficial to stick to. Below is a selection of those which our trading clients consider the most important. To access the full list and the rest of our library of educational publications, speak to your Accendo Markets contact about opening a trading account. The 5 tips to maximise your profits using CFDs 1. Don’t risk too much: You’re unlikely to call every trade correctly. With the aim being to stay in the game for as long as possible ensure you retain enough in the pot to allow you trade through the tough times. Scale up your deal sizes if profitable, but down if not. 2. Run profits, not losses: Most are guilty of taking profits too quickly but closing losses too slowly. If a profitable trade wants to become even more profitable, let it be. If a trade is going wrong, why watch it get worse? Recovering losses is even harder work. Use stops wherever you can to keep losses under control and protect existing profits. 3. Markets go down as well as up: Don’t limit yourself to buying. Calling the bottom can be akin to catching a falling knife. Don’t rule out shorting. You can also profit when markets are falling. Respect the trend. Going with the flow can be a lot easier. 4. Take stock: Review your positions regularly. Is your reason for being in a trade still valid? If not, then why stay in it? Be disciplined. Don’t let your heart rule your head. You are risking money - your money. Keeping track of your errors also helps you avoid doing the same again. 5. Trade with conviction: Don’t trade for the sake of it. If worthwhile opportunities (on which to risk your money) can’t be identified in your favored sector, you may be best looking at another sector/asset class. Sitting on your hands or choosing not to participate in the market is also a valid trading decision. Adhering to these simple points can help prolong your trading lifetime, giving you the opportunity to make it both a profitable and ultimately enjoyable one. To discuss opening and funding a trading account, contact us on 0203 051 7461
Our research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. Accendo Markets research has not been prepared in accordance with legal requirements designed to promote its independence and may not comply with FSA guidelines to prevent conflicts of interest and is not subject to any prohibition on dealing ahead of the dissemination of research. As such, this research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only. Accendo Markets considers information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Analyst Accendo Markets Ltd is Authorised and Regulated by the Financial Services Authority (FSA) No. 475285. We offer CFD, SpreadBet and FX Trading Services Accendo Markets Ltd, Registered in England and Wales No. 6417051. Registered Office: 64 London Wall, London, EC2M 5TP, +44 (0) 20 3051 7461
Trading with a Personal Touch
Published on Oct 17, 2013