Vital factor is self-discipline

Discipline is one of the keys to successful trading. Chunhao Weng keeps his CFD trading simple and describes himself as “a very conservative trader”. His borrowings are low, with a gearing level often less than one and no more than two or three times.

He sticks to trading what he has the most experience in and currently trades two sorts of currencies: the euro to $US and the Australian dollar to the $US. He did trade gold but is not doing so now.

Weng started trading CFDs five years ago when a friend introduced him to it. “I found it more exciting than gambling,” he says.

Weng admits his first year of learning about trading CFDs was hard. The mistakes he made were expensive and he lost money. But he built up his experience through trial and error, researched the market and his confidence grew.

He is now a much more patient investor who always has a reason for a trade and sticks to a plan. “It is important to avoid any random trades,” he says.

He also uses protection stops on his investment through his CFD provider, IG, to minimise his losses. If he sets a level to sell, the trade will close at that price and it will save him from further losses. He estimates he makes money 50% of the time.

Wang has a disciplined plan that takes around two to three hours several times a week in the morning before work and at night. He has three steps in his daily trading strategy:

When he wakes up in the morning he checks the business and economic news, price movements and overnight markets to try to determine what the market is thinking.

He likes to look at IG’s charts and technical analysis to determine the trend. If conditions are favourable, he sets up certain levels and sets an alarm on his phone for an order before he goes to work.

“It is important to construct your plan before you do a trade,” says Weng. The alarm alerts him to when the currencies reach those levels so he can buy in or sell.

Weng isn’t a day trader sitting glued to his computer all day. He holds down a full-time job and does his trading at the beginning and end of the day.

He says his trading is based on a simple decision process. “I am aware of how much loss I can afford and how much profit I am looking for.”

Weng is aware of the social media sites that foreign exchange traders follow and is happy to share his views. The five most popular, according to Investment Trends, are OpenBook (eToro), ZuluTrade, myFxBook, Currensee and Tradency. He also looks at some from China. But he doesn’t want to be influenced by someone else. He wants to develop a trading system that suits his own level of risk and circumstances.

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