One of the main reasons that people look to CFD Trading Strategies is the ability to leverage their trading account. This leverage certainly does work as a double edged sword with the more leverage you use the greater the gains and the larger the losses. Your goal is to protect your capital at all times and today we are going to have a look at how over leveraging your account can result in absolute disaster.
CFD horror stories
I can't begin to tell you the stories I have heard about big wins and big losses. A personal friend of mine had the good fortune to make in excess of $90,000 in a night only to give all of that back and then some over the next couple of trading sessions. If you hang around the CFD trading arena long enough you'll come to realise how wild some people's returns are and it all comes down to the amount of leverage you use on your account.
CFD Trading Competition explodes with results through the roof
One major CFD broker in Australia ran 2 separate trading competitions with real money and the first competition saw the initial leader turn his $5,000 into over $125,000 in less than 6 weeks and then over the next 2 give back all of those gains and have around $3,500 in his account. How about those wild equity swings. Another trading competition saw the leader amass over 10,000% gains only to finish the competition with a 6,000+% gain.
Essentially the rule of thumb is to keep your CFD leverage to an absolute minimum and run your CFD trading strategies safely. Remember your number 1 priority when starting out is capital preservation. Winning and earning massive returns should always be secondary to preserving your capital.