About Day Trading CFDs: What Are The Tips To Succeed With CFD Trading Intra Day?

If you're considering CFD day trading instead of trading with CFD positions that are held over several days, here are some things to consider, in order to tell if it will suit you.

Firstly, why do people day trade CFDs?

The main benefits of day trading over a medium or longer term style of trading are:

1. No overnight market risk or exposure.

That is, you don't expose yourself to the risk of a stock or share and hence the CFD gapping up or down overnight. If this gapping occur against you, then you can exit at a position at a much different price than your intended exit, which is slippage.

2. No interest cost for long CFD positions.

If you hold long CFD positions overnight, then you are charged an interest amount, which is usually a reference rate such as the LIBOR or the RBA cash rate, plus a certain number of percent, depending on the broker. In intraday trading, you will not have to pay these.

3. Able to get short term results.

That is, if you need to rely on short term cash flow from trading, it's more possible with trading as you're in the position for such a short time. This is in contrast to longer term trading, where there may be fewer trades, and the trades that are entered typically stay in the position for weeks and even months.

4. Have time and want to be busy.

This is not a very logical reason to day trade CFDs, but it is a reason why some people do it. They have the extra time and want to gain from movements in the market. And they want to stay busy. This is well and good if you have a good strategy and can profit from the market. So trade for profitability and some people combine both a long term system with a shorter term system such as day trading.

5. Can help smoothen out an quity curve if you are also trading a medium or long term system.

Some traders to trade multiple systems, one that is low maintenance and longer term, and a higher maintenance one that is short term, The net result of this is that potentially your equity curve will be more smooth and have smaller drawdowns.

Now the difficulties of day trading are:

1. You need to watch the screen continuously or nearly continuously.

Day trading means that you are shorter time frames, so you wil need to be at the screen during the day. This means that you should have a block of time that you can use to trade your strategy with. Ideally to focus and have no interuptions. Also, peopel decide how many days a week, or how many sessions or hours per day or week, to trade, as part of their trading rules.

2. Need to make decisions faster, so you need to know your system very well.

You need to know your system well, and make decisions in minutes. This means that you should practice your system and know it well before you trade it. Also be prepared with your platform and know how it works so that you can enter and exit trades confidently and easily.

3. Usually will catch smaller moves, so to make profits and overcome fixed costs, will need to have a larger float or use more leverage.

If you have a goal to make a certain amount, then you can work out the float or leverage that you will need to achieve this. The reason for this is because of smaller moves compared to long term trading. Also, note there are commissions with most CFD providers to get in and out of trades, so your trade will have to overcome this cost when profiting from moves in the market.

With increased leverage the advantage is that you can trade larger trade sizes, but remember that leverage increases both wins and losses in a system, to magnify the system overall.

This implies that you shoul dhave a solid, performing system to trade.

So if it suits you, then consider educating yourself further a day trading course or from a good trading mentor that typically uses price action and indicators to determine a robust trading system.

Day trading may appeal to you if you enjoy looking at stock prices moving, have a good system, and trading in the shorter time frame.