CFD trading typically involves backing your judgement whether a financial product is likely to appreciate or go down in value. CFDs are traded on margin, meaning that, thanks to the increased leverage available profits and so too losses can be substantial.

The vast majority of all CFD trading takes place on sophisticated online trading platforms which bypass the need to jump through hoops with a broker.

While CFD trading is a thoroughly modern way of taking a position on the financial markets at a fraction of the cost of more traditional methods, the principles that underline both the behaviour of the markets and the trading strategies needed to harness them remain pretty much the same.

Here are the three steps to successful CFD trading.

The trend is your friend.
Did you hear all the professional traders shout ‘cliché’? Thought you did, but clichés last because they were all once original, truthful phrases. In short, markets trend either up, down or sideways.

For sustained success and greater peace of mind the majority of traders prefer to go with – not against – the trend; trying to execute a quick trade against a short-lived trend can sometimes be a bit like trying to hail a cab at rush hour and turning up late for that meeting as opposed to booking one in advance and arriving calm, collected and on time.

Run with your profits.
It really is key to learn when to take profits and when to let them run. It’s not wise to take profits too early but then, when is the best time to bank them?. However with CFD trading you have a handy safety valve with trailing stop losses. When a trade moves in the direction you hoped always update your trailing stop-loss to lock in any profit. It’s always good to set a target for your profit on any trade.

Chart analysis and pattern recognition tools can help you spot when a trend might be reversing.

Cut your losses.
Following a winning trade or two your confidence is high. You’ve done the research, spotted and identified the trend and all the signs are there, just as they were before when you made a profit last time. You take your position. It goes well and then, suddenly, the trend reverses and keeps going.

At this point it is very tempting to wait and see if the losing trade turns back into a profitable one, we’ve all done it. It’s not spineless to pull out of a losing position, it’s just smart. But if you do stay in, don’t be surprised to find yourself following the losing trade right to the bottom.

Just as with profits it’s a good idea to set a maximum loss on any trade you place.

For more information about how to become a better CFD trader visit www.igmarkets.co.uk.

Always remember that trading CFDs can result in losses as well as profits, so make sure you understand the risks involved.

The financial markets have been pretty hard to ignore recently, the global recession has affected everyone in one way or another.

One of the ways you can take a position on and take advantage of fluctuations on the world’s financial markets is via CFD trading.

To the unaccustomed the financial markets can seem bewildering at times. There are many factors that can influence the financial markets, but sometimes markets can seem to change direction in the blink of an eye, but what specifically influences them?

How does one know which factor will have an influence and when? And which factor will have more influence, and which will have less? So many questions.

There’s no real short-cut to acquiring the kind of knowledge you’ll need to make a successful trader, that said, it’s relatively easy to get up to speed as to what you should be looking out for.

The global economic calendar is a busy one with which sees country’s releasing economic figures at regular intervals. Make sure you know the dates of all the major releases and that you monitor economic analysts’ predictions and media reaction to gauge how the markets react.

The latest non-farm payroll figures came out of the US on June 4. The non-farm payroll figures are released by the US Bureau of Labour Statistics on the first Friday of each month and signify the total amount of paid US workers excluding certain sectors such as general government and farm employees.

Analysts predicted that there would be a significant increase in private sectors jobs created, and traders looking for some positive signs that the world is indeed on the road to recovery were optimistic too. 

The figure came in at 431,000 less than what was expected. The amount of private sector jobs created was the lowest seen for over five months, at 41,000.

Media reaction was negative and unsurprisingly the Dow dropped over 170 points on opening, while after enjoying a flat but relatively buoyant morning the FTSE 100 also fell after the news broke, losing 2.1%.

Like any investing the greater your knowledge of the instrument you want to trade the better your chances are of success are, especially long-term.

A recent report by research organisation Investment Trends suggests that the largest CFD provider in the UK is IG Markets. IG Markets offer free market commentary, research and expert analysis. }