CFD trading is high risk and may not be suitable for everyone. Losses can exceed your deposits.
Manage risk and create a trading plan
One of the most important aspects for new traders is learning how to manage risk more effectively and develop a sound trading plan.

Creating a trading plan can help you determine how much risk you feel comfortable with while making your investment objectives clearer. Once you have settled on a trading plan that you are comfortable with, you’ll also be able to more accurately record entry and exit price and so track your trading performance more precisely.

When devising your trading plan keep these questions in mind: what is your motivation for trading? How much capital do you realistically have to invest? Have you considered setting up a stop loss? How much time do you have available for trading and finally, what are your expected returns?

What is your motivation for trading?
Are you trading for pure profit or do you see trading as a potentially enjoyable pastime? By being very clear about your motivation for trading, you’ll be more able to judge the amount of risk you’re happy to expose yourself to. This is crucial when it comes to devising your trading plan, will your trades be high risk and high reward or will you trade across a wider range of markets to diversify your positions and thus minimise your risk? If you’re just starting out it is advisable to begin with markets that you have the strongest understanding of and feel comfortable trading. The more confident you become the more appetite you may develop for risk and bigger, bolder trades.

The importance of stop losses for managing risk
Setting up a stop loss on your trades will allow you to more efficiently manage potential losses should the market turn against you.
When you trade on LCG Trader you’ll be able to quickly and easily set up a stop loss on all your trades which will automatically close your position once your losses reach a pre-set level. This is particularly useful for new traders and can be a good way to carefully track your overall trading performance.

How much time can you dedicate to trading?
When devising your trading plan, be honest about how much time you have to dedicate to managing your positions and evaluating your trades. The more hands-on you are, the more you will be able to target breaking news and opportunities caused by market moving events as they happen. If you have less time to spend analysing and watching the markets, it may be better to take long positions based on historical trends, analysis and market insight.


CFD trading is high risk and may not be suitable for everyone. Losses can exceed your deposits.