Account Management

The process below describes the process of formulating cfd money management and practical advices on formulating your own cfd money management system in CFDs - cfd account management.

1. Keep the Necessary reserve (over and above the broker margin requirement)

This reserve is needed for unusual situations & it should be not less than 50% of invested equity. It is the first rule of account management in margin definition for opening orders. However, many experts and analysts advice more reserve of about 70 % - 90 % of invested account capital for safe operation in cfd.

2. Do not to invest more than 2%-6%

This is one of the principle that helps to avoid bankruptcy: never invest more that 2% on one market and do not to invest more than 6% in the total open trades.

3. Never risk a loss of more than 2% of invested money on any single trade

This is not the same as above, the above is never invest more than 5%, this is never to lose more than 2% on a single trade. In this case a trader risks only lose small part of his equity with an unprofitable order.

4. Diversify

Use optimal investment of your trading funds is that you should diversify to some degree. Just In case one trade losses, the order can be covered by profits of another trade.

5. CFD money management rules should be well written down

On a piece of paper or better still in your trading plan. If you open orders then this trading orders should be within your cfd money management guidelines.

6. Define your stop loss and take profit levels

When you are trading put your stop cfd orders in order to avoid any huge losses or even bankruptcy. Profit taking levels will ensure you get additional profit by taking money out of the market. Analyze the situation and predict the future movement of price action and place orders accordingly. You can even use indicators and volatility of the cfd to know where to place these orders.

7. Define of possible loss or profit before executing a trade

Consider only opening trades when you have the chance to get profit against loss ratio of 3:1. If you cannot do it then don't open the order.

Cfd money management should seek to bring maximum profit to the traders account, keeping profitable orders as long as possible is a good strategy. Therefore, if you make some profitable orders you can have goods results.

8. Try to follow the rules of opening & closing the cfd orders specified in your plan.

That way you'll get consistent trading results required for making profits in market.

9. Do not revenge against the market

In this case, you'll not be analyzing the situation but you will just be trading based on emotions and you'll lose more money.

10. Timely rest

Don't trade when you are exhausted, no matter how tempting the situation may seem, you might not get the profits that you can if you were to trade based on your cfd schedule.

Considering these - Account Management Rules and Guidelines can make you trade profitably. Try to create your own cfd money management strategy that gives you good profits.