There are many benefits directly attributable to trading contracts for difference (CFDs).
Some of the most prevalent include the ability to profit when prices are falling, access to a plethora of underlying assets and leveraged trades.
If this is the case, why are only a handful of investors successful year after year? The key lies within the smaller details. Let take a look at one of the best-kept CFD trading secrets before examining how it can be deployed alongside your existing strategies.
The Power of the Economic Calendar
We are all aware of the importance surrounding economic calendars.
However, this significance is often lost within the world of CFD trading. The likely culprit involves the relative short-term nature of many positions. After all, why would economic calendars be necessary if trades are taking place in a matter of hours?
The best traders have learned to appreciate that the exact opposite is true.
These calendars are intended to clearly track any events that may exhibit an economic impact upon the marketplace. Some common examples include (1):
- Consumer Price Index (CPI)
- Actions taken by central banks.
- Major decisions such as interest rate changes.
- Political events (a great recent example is the Brexit news).
- Any predicted announcements associated with important domestic figures such as GDP.
These metrics are even more important when referring to CFD assets such as indices or currency pairs. Without immediate access to such data, it will be nearly impossible to accurately predict short-term price hikes or anticipated falls in value.
Still, economic calendars represent only half of the entire equation. These are of little importance without another very powerful tool which the majority of traders fail to capitalise upon: the power of mental malleability(2). How is this concept defined in relation to the CFD community?
The most astute CFD traders possess an innate sense of flexibility in reference to their investments. The bend in a similar manner to a reed in the wind when the economic climate begins to change. Not only will they be able to predict the fiscal “weather” through the use of the calendars mentioned above, but they can take advantage of favourable currents when the time is right. Thus, their portfolios tend to remain within healthy margins even during volatile times.
Patience and discipline are the keys
This sense of flexibility then needs to be tempered with patience and discipline.
If you’re consistent with your practice and learn CFD trading every single day, there’s no reason why you can’t be one of the top 1% of profitable traders.
This methodology will naturally incur losses from time to time, so it could be wise to set up a demonstration account with the help of internationally respected platforms such as CMC Markets. You will be able to learn the proverbial ropes without risking an inordinate amount of capital.
The irony revolves around the fact that economic calendars by no means represent a “secret” within the investing community. If more CFD traders are able to fully appreciate their importance, we should witness a massive amount of success in 2019.