How to Control CFD Trading Volatility: Techniques for Singaporean Traders

One of the most popular forms in which one can speculate on the financial markets without owning the underlying asset is CFD Trading in Singapore. However, this field isn’t very risk-free and attaining success in such a high-risk, high-reward activity requires proper trading plans. Here is how to create a suitable plan for you.

Establish basic trading goals. Ask yourself what you are trying to achieve. Whether long-term growth or short-term profits, it is helpful to have objectives that allow you to check against them the risk before the appropriate strategy and whether you’re in for long-term growth or short-term profits. By setting objectives, you also avoid emotional decision-making when the market fluctuates and ensure that trading stays on track with the financial aspirations.

Then, comes the risk management plan. CFDs are a leverage instrument, meaning you can multiply either profits or losses. Because of this, you cannot ignore controlling your risks. A way of controlling risk is through stop-loss orders, where a trade is automatically closed when its market move against you by a predetermined amount. To reduce your danger of losing money, you should only risk a small portion of your capital, say 1% to 2% per trade. You won’t feel exhausted even if you lose a lot of trades.

Choosing a reputable brokerage is the most important aspect of your CFD trading plan. If trading CFDs from Singapore, the brokerage has to be licensed and regulated by the Monetary Authority of Singapore to ensure the security of your funds. Look for brokers offering user-friendly platforms, low fees, and a wide range of access to markets. Besides platforms, other support features are very important, for instance, educational resources and customer service or resources that can help you out build your skills and clear any mistakes fast.

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Once you find a good broker, you have to identify the strategy that fits you and your risk tolerance. Some people trade for the day, and some may be interested in swing or position trading. Of course, no matter what strategy you end up using, some knowledge of technical analysis is essential. Most traders like using charts, indicators, and trends in order to define the best possible time of entry and exit in the market. Other traders use a mix including elements of fundamental analysis for monitoring general conditions in the markets.

Keeping a trading journal is the last but also an extremely crucial constituent of your plan. Writing down each trade, and why it was taken, will help you gauge your progress and learn from your mistakes. With time, this will help hone your decision-making abilities and discipline.

The last one is emotional discipline. Trading could be a serious roller coaster of emotion, especially when the markets are volatile. A good trader will know how to control emotions and stay on course in short-term market movements. Sometimes, you’d do something impulsively; however, you have to step back and reassess your strategy.

These steps will allow you to make a controlled CFD trading plan, which will help you cut through some of the mess that is associated with CFD trading in Singapore.