Now as you’ve got some extra cash to play with, you are planning to put it into CFD trading and have even opened a CFD trading account. But you won’t want to lose your hard-earned money, will you? So, you need to learn certain CFD trading strategies.

The various trading strategies fall into two basic groups: fundamental and technical. Fundamental strategies are just that – you’ll closely examine fundamentals of a company in any given industry, such as returns on their corporate assets, their track record and history, their management team and their strong points, etc. But the more active trading strategies are technical. These can be further classified into two – discretionary and mechanical.

Range (Rangebound) Trading

Some way or the other, all mechanical trades end up being some sort of range trading. Being entirely mechanical, they are not very much interesting. They are ‘set and forget’ trading rules that you can program to occur automatically. If a stock of a company hits X, purchase and if it hits Y, sell. You just set the rules and forget. Trades take place automatically.

However, discretionary trades are dynamic, interesting and above all, active. They are based on the idea that you as a CFD trader equipped with various analytical tools are in a unique position to find emerging trends and respond to them cleverly to do the business. There are indeed a variety of analytical tools which you can use to get a better perspective about forthcoming price changes and trade accordingly. Here are ways with which you can do that.

Breakouts

Breakouts are a pretty common trading strategy and enable you to identify a key price level for a certain stock. When the price comes to your key level, you sell or buy (whichever is correct to the existing, prevailing trend). What’s important here is to ‘avoid’ such trades when there are no clear signals from the CFD market regarding which direction the overall trend is moving. Here you should have an absolutely clear understanding of the trend and its direction in order to succeed.

Contrarian Investing

This is basically a market timing strategy. The underlying idea is that you play on the fact that trends keep changing. If the price of a stock is trending lower, you choose a point you think to be at or close to the end of that trend and buy anticipating a move in the opposite direction. The same thing can be done in reverse by short selling a stock that’s been rising in price, anticipating a sudden change in price direction.

You’ll have to learn these strategies in order to be a successful CFD trader. Learn them and enjoy trading!