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CFDs Made Simple: A straightforward guide to contracts for difference by Peter Temple

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6. Trading Disciplines

We’ve spent quite a bit of time so far looking at the different strategies you can employ when using CFDs for purposes other than simple geared-up speculation. But discipline and planning are equally important.

CFDs trades are inherently volatile. If the trade goes the wrong way you will get margin calls and may have to sell other assets to meet it. So buying and holding is not a choice you can make here. You need to have a plan of action for your trading, have a method for monitoring it, and a trigger to make you act decisively if it looks as though things are going wrong.

You need to be able to use various investment tools, including technical analysis software. These can help you define the likely risks and rewards ...

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