When it comes to trading, there are a variety of strategies that investors can use to try and make a profit. One such strategy is timed trading, which involves making trades at specific times to take advantage of market conditions. When trading CFDs, you need to remember a few things if you want to try timed trading. You can try this out yourself at https://www.home.saxo/en-sg/products/cfds.
What to consider before trading CFDs with timed trading
Know the market conditions
One of the most important things to do before trying timed trading is to familiarise yourself with the market conditions. It includes understanding the volatility of the markets and what timeframes are typically the most active. With this knowledge, you’ll be able to make more informed decisions about when to make trades.
Have a plan
Another essential thing to do before embarking on timed trading is to have a plan, which means having a strategy for entering and exiting trades and how much risk you’re willing to take. Without a plan, making consistent profits with this approach will be challenging.
Use stop-loss orders
When trading CFDs, it’s essential to use stop-loss orders to limit your losses, especially when using timed trading, as you may not be able to monitor your positions as closely. Stop-loss orders can help protect you from significant losses if the market moves against you.
Take advantage of price movements
One of the benefits of timed trading is that you can take advantage of small price movements because you can enter and exit trades quickly before the market has a chance to reverse course. However, this also means you must be prepared to take more risks.
How to do timed trading with CFDs
Find a broker
The first step in timed trading with CFDs is finding a broker that offers the products you want to trade. It includes the underlying asset and the timeframe you want to trade in.
Familiarise yourself with the product
Before trading CFDs, it’s essential to understand how they work, including the product you’re trading and the risks involved. Before putting money at risk, you should also be comfortable with your chosen strategy.
Choose a time frame
When using timed trading, choosing a time frame that matches your comfort level and investment goals is essential. If you’re new to trading, start with shorter time frames and gradually increase the length of time frames as you gain experience.
Enter a trade
Once you’ve chosen a time frame and an underlying asset, it’s time to enter a trade.To do this, you’ll need to place an order with your broker. When placing an order, you’ll need to specify the price you want to enter at, the size of the position and the type of order.
Monitor your position
After you’ve entered a trade, it’s essential to monitor your position and make sure it’s going as planned, which includes checking the underlying asset’s price and ensuring your stop-loss orders are in place. If the market contradicts your prediction, you may need to close your position to limit your losses.
Exit your trade
When you’re ready to exit your trade, you’ll need to place an order with your broker by specifying the price you want to exit at and the position size. Once your order is filled, your trade will be closed.
CFD trading risks
When trading CFDs, it’s essential to be aware of the volatility of the markets because price movements can be rapid and unpredictable. If you’re not comfortable with this level of risk, you may want to consider another investing method.
Another significant risk when trading CFDs is leverage, which refers to using borrowed money to amplify your profits (or losses). While you can make more money using leverage, it can also magnify your losses if the market moves against you.
When trading CFDs, there’s also a risk that the other party in the contract (the counterparty) will default on their obligations. This could happen if the counterparty is unable to meet its financial obligations. While this risk is typically low, it’s still something you must keep in mind when trading CFDs.