LONDON, July 18, 2012 /PRNewswire/ --
Investors can maximise their market involvement by only having to deposit a small fraction of the total trade value, whilst maintaining the same heightened exposure through their City Index CFD trading account.
With numerous benefits available, including its high leverage feature, investors are able to magnify their profits.
However, high leverage is a double-edged sword and can also maximise losses.
In the following guide, we offer two easy-to-follow CFD trading strategies to help you limit your losses and magnify your profit potential.
CFD Trading Strategy: Risk Management Orders
When trading CFDs with City Index, you can take advantage of their suite of risk management tools.
The first step in managing your trading risk is to apply stop loss orders to your CFD Trading account.
Choose between a Standard and Guaranteed Stop Loss Order (GSLO); with the latter offering the greatest protection, particularly during times of market gapping and slippage.
A GSLO is an order to close out a position at a level prearranged by you, incurring a small charge* for the service.
*This charge can vary across different CFD markets.
CFD Trading Strategy: Analyse the Markets
Understanding your chosen market is fundamental to your success.
Through technical analysis, you can analyse how your chosen market moves through historical charts.
You can also utilise fundamental analysis; whereby you look at economic factors such as financial news and events that could potentially affect a market's price movement.
For example, if a spike in crude oil occurs without your knowledge, and you start trading CFDs in British Airways shares, placing a 'buy' trade on British Airways CFDs; fuel costs will rise for the carrier and therefore may result in downward pressure on its share price, resulting in potential losses for you.
By understanding a market on which you trade, you have the upper-hand to react quickly and correctly when news emerges.
In addition, it can also help guide you when placing your stop losses (see above) and limit orders.
Start Trading CFDs Online
It's easy to start trading CFDs online. Simply apply for an account today and soon you could be taking a position on popular markets such as indices, shares, currencies and many, many more.
Access Free CFD Trading Articles
If you found this article informative, you can find many more free CFD trading articles online through City Index: http://www.cityindex.co.uk
About City Index:
Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.
As a group, we transact in excess of 1.5 million trades every month in over 50 countries. We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting.
We constantly look to improve the performance of our platforms and expand our range of services. The result is our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support. Visit http://www.cityindex.co.uk/ for details.
CFD trading is a leveraged product which can result in losses greater than your initial deposit. Ensure you fully understand the risks.
CFD trading is exempt from UK stamp duty. However, tax laws are subject to change and depend on individual circumstances. Please seek independent advice if necessary.
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