SAFTEY RULES ON LEVERAGED TRADING

SAFETY RULES ON LEVERAGED TRADING

Here are some "Mental Health" and "Safety" ideas I have learned from the last 5-6 years playing on CFD markets. Read them, they are important and will quite probably save you heaps of grief and stress



Here's some safety rules and general advice for anyone using CFDs:

Don't use borrowed money to play on a Margin or CFD Platform - The events of huge market swings have become all to common now and there is no point loosing money and still having to pay off a loan

Only play with money that you can afford to loose - And chances are you WILL loose initially. I did, everyone I know who plays on the CFD platforms has lost their money on the first few ventures into this world. The trading environment is tricky right now, it has been for a couple of years and shows no sign of easing up. It takes a while before people have grasp the real concepts of highly leveraged trading instruments and how badly they can be affected by leveraged markets

CFD trading and to a lesser extent Margin lending is stressful - If you don't have the head for it better to find out now than after you've invested a large lump sum into it. You WILL have sleepless nights - it will pre-occupy many of your thoughts and take up a lot of your waking hours. Be warned. CFD trading is a much different head space to just a slow buy and hold strategy and is not for everyone. It is risky and if you are naturally adverse to risk this is NOT for you 

Take out winnings regularly. Eventually you will start to make money, I take out 50% of what I earn on an almost daily basis so if a huge market swing comes along and wipes out my trading fund I can say to myself at least I had that income coming in , and hopefully I have made back my initial investement (which for me usually takes a 2-3 months) 

Keep an Emergency Fund  Put a little aside to start trading again from scratch in the event of a market swing going against you and wiping out your trading fund. then you can start again and keep the cash flow coming in. 

DIVERSIFY - if you find that you're making a lot of money dump it back in a non leveraged portfolio or use it to pay down loans mortgages etc.... use some common sense,,,, don't go spending it all on hookers and crack!