A trading strategy is the most important factor to become a successful trader. Those who have a strong trading strategy tend to do well in the trade execution process. In fact, most professional price action traders spend a decent amount of time developing a perfect trading edge to deal with the market. It might sound very hard but if you follow some basic rules, you should be able to make a professional trading edge within a short time.
Let’s learn to develop a professional CFD trading strategy in 5 easy steps. Follow the tips mentioned in this article and you should be able to curate a robust trading edge.
Prepare your mindset
Before you start to trade the market or learn the basics, you should be working hard to prepare your mindset. Without having a strong mindset, you can’t succeed in the retail trading industry. Thousands of traders join this market and quit trading after facing big challenges. To make a living out of trading, you need to understand that trading is not an easy task. And to develop a robust edge, you have to devote yourself properly. Only then you can expect to succeed in this profession.
Getting a paper trading account
In the second step, you should get a paper trading account. The paper trading account is also known as the demo trading account. Keep on trading in the demo account and learn about the support and resistance level. Once you become good at analyzing the support and resistance level, you should try to take the trades at those important levels. Remember, the support and resistance level drawn in the lower time frame is not that accurate. So, learn to find these levels in the higher time frame only. Never forget the fact, practice makes a man perfect. Eliminate all the confusion and start practicing in the demo account till you feel confident with your actions.
Study the trend phases
Knowing about the different phases of the trend is very important to your success. You may learn about the trend trading technique by using the free resources at Saxo. Try it out here and see if it can help you to improve your skills. We are sure that you will find the free resources at Saxo very informative. After learning about the different phases of the market trend, try to take the trades in the demo account. Execute the trades in favor of the existing trend and try to secure decent profit.
Stop trying to trade against the existing trend as it will make the overall process of trading much harder. At times, you might think that the trend trading strategy is not that effective. But remember, every professional trader takes their trades in favor of the trend only.
Risk management technique
After knowing the basics of trading, you should incorporate risk management techniques into your trading system. Unless you trade the market with a proper risk management policy, you will keep on losing money. Most of the traders think they know every bit of detail about this market. But this is not all true. To become good at trading, you have to learn things regularly. And losing trades will be a common problem. But if you trade the market with a high risk to reward ratio, you won’t have to face any trouble in overcoming the risk factors. Try not to risk more than 3% of your investment as it will make things really hard.
Trade with discipline
The last thing which you need to follow is discipline. You will never succeed in the CFD trading industry without following strict sets of rules. Create a well-balanced trading routine and follow it properly. Never over-trade the market as it will make the overall process of trading extremely difficult. Stick to the simple trading technique and you slowly become a profitable trader. Last but not the least, never lose hope in the trading profession.