{"id":6648,"date":"2020-09-02T12:13:23","date_gmt":"2020-09-02T12:13:23","guid":{"rendered":"https:\/\/www.losboquerones.com\/?p=6648"},"modified":"2020-09-02T15:12:17","modified_gmt":"2020-09-02T15:12:17","slug":"the-whys-in-losing-money-on-cfd-trading","status":"publish","type":"post","link":"https:\/\/www.losboquerones.com\/the-whys-in-losing-money-on-cfd-trading\/","title":{"rendered":"The Why\u2019s in Losing Money on CFD Trading"},"content":{"rendered":"
CFD Trading can be very risky. Unlike Forex trading, the risks in CFD trading are way higher. You have probably heard of a colleague or a friend who got into CFD trading and eventually lost so much money in the market, probably with the notion that they already have enough experience in other financial markets out there. But what are the common pitfalls these traders around you fall into and how can you prevent them? Here are a few things you need to look out for in order to at least minimize potential losses in your CFD trades<\/span><\/p>\n Volatility\u00a0<\/b><\/p>\n As a CFD trader, you find yourself being in a situation where you are offered a myriad of leverage but can not ride out the volatility. You find your position closed but do not have enough in your deposit to meet the margin call. Even when you find yourself making the right decision with the right outcome, you still lose given you were in a position that was forcibly closed at a loss. This is due to a result of mismanagement of your account funds. Some traders however, find so much excitement from the volatility and decide to increase the leverage drastically but do not have the right funding for it.<\/span><\/p>\n Sunk Cost fallacy<\/b><\/p>\n A sunk cost is any past cost that has already been paid and cannot be recovered. For instance, you have decided to start by putting a small amount of money until you have reached an increase in your investments. This gives you a massive confidence boost and you start maxing out your multipliers, by then you start making additional investments in <\/span>CFD trading<\/span><\/a>. Eventually you start losing as the combination of high multipliers and volatile stocks starts affecting your investment. You start thinking \u201cHey, I have already invested X number amount of money in this, I might as well continue and try to recover from my losses\u201d and you try by investing more even if the market was low which eventually lead to more losses.<\/p>\n