How to not lose your money in CFD trading?

Trading CFDs (Contracts for Difference) can be exciting and profitable, but it also carries a high risk of losing money if you’re not careful.

CFD trading allows you to trade with leverage, meaning you can control a larger position with a smaller deposit. While this can amplify profits, it also increases risks significantly.

If your broker offers 1:100 leverage, a small price move can wipe out your account in minutes.

Never go “all-in” or open as many positions as your balance allows. This is a common beginner mistake that leads to blown accounts. A conservative approach suggests using no more than 1-2% of your total balance as margin.

For example, if you have $10,000 in your account, you should use only $100-$200 as margin. This way, even if a few trades go against you, you’ll still have capital left to recover.

Don’t put all your money into a single asset. Spreading your investments across multiple instruments (stocks, forex, commodities, indices, etc.) helps reduce risk. If one asset performs poorly, others may perform well and offset the losses.

For instance, if you trade only gold and it crashes, you’re in trouble. But if you also have positions in currency pairs or tech stocks, you might still end up in profit.

Many traders make the mistake of holding on to losing trades, hoping the price will “come back.” This is dangerous. Instead, set a stop-loss level before you enter a trade and stick to it.

On the flip side, don’t close profitable trades too early out of fear. Let your winners run by using a trailing stop-loss or scaling out of positions gradually.

Nowadays internet is full of people advertising their services: “synthetic indices signals for free” or “get rich overnight with my crypto trading signals” or “my super crypto trading bot will double your investment in a week”.

The truth is - if someone claims they can double your money in a short time, run! These are often Ponzi schemes or high-risk traders who could lose everything. Legitimate fund managers focus on steady, sustainable returns - not gambling with your money.

If you really want someone to manage your money, do not give it to random people on social media!

Use established firms with a proven track record. They will provide you with a proper client agreement and will never make unrealistic promises or even use the word “guaranteed”. And expected return made by real money managers won’t be higher than 10-15% per year.

Always enable two-factor authentication (2FA) on your trading account and email. Scammers and hackers are everywhere, and once they gain access to your unprotected email - they can drain your funds from everywhere.

Also, never share your account credentials, passwords, or private keys with anyone - even customer support! Legitimate brokers will never ask for your password or OTP.

Be vigilant and always make sure that whenever you log into your account on a broker’s webpage - it’s an official website and not some kind of a phishing link.

Fear and greed are your worst enemies in trading. If you panic when prices drop or get overconfident when they rise, you’ll make impulsive decisions that lead to losses.

Stick to your trading plan: do not risk more than your plan defines, do not move stop losses further just because “you feel something”, manage risks properly, and don’t let emotions dictate your trades. If you feel overwhelmed, take a break and reassess.

CFD trading is not a get-rich-quick scheme. It’s like business: both require knowledge, strategy, discipline, investment, and unfortunately, both can result in a failure. But they both teach us so much!

Some seasoned traders even say “don’t you dare consider yourself experienced if you haven’t lost everything in your balance at least 20 times!”. Continuously educate yourself, backtest your strategies, and practice on small balances before risking really big money. Remember that markets evolve, and what works today might not work tomorrow. Stay updated with news, economic reports, and market trends.