Would you like to trade in stock CFDs but have no idea where to start? Then read on for our top tips.
CFD trading is a popular way of making profits via the stock market without actually owning any shares. We present our knowledge about CFD trading so that your money remains safe and you can make the most of it.
1) Learning by doing
If you are not already familiar with using financial markets, then take some time to learn at least the basics (e.g., how dividends work, what leverage means). It will help if you know exactly what kind of risks come with this type of investment.
2) Set up an account
You need to have some form of account to be able to trade on this platform. To trade CFDs in the Netherlands, you first must open a margin trading account with a broker, as mentioned above. This can be done by signing up on their website or going into a physical shop close to you.
Most brokers provide free demo accounts for buying shares that do not require any deposit at all, so having no experience is no excuse for not trying it out! Trading with play money allows newbies to practice actual market moves without risk before actually putting their hard-earned euros down on the table.
3) Deposit some money
Make sure you have enough deposit to cover possible losses and fees. This will be taken from your account in the form of cash or securities (depending on your broker). Compare how much you can invest with different brokers and consider any minimum amount required.
Some brokers even offer very low minimum deposits but note that it is usually more expensive than trading with a more considerable sum. When you know what kind of strategy you plan to use, check if there are extra costs for that, e.g., commissions or overnight fees, and consider how profitable this may be compared to other strategies (which may require less initial investment).
4) Study the market
Use trading charts and tools to check out what the market is up to. Maybe you prefer a more traditional chart, or perhaps an alternative technical analysis method? Improve your skills by checking YouTube tutorials, reading books on technical analysis, posts from traders on Reddit, watching webinars or simply experimenting with free demo accounts.
You can also achieve a basic understanding of how the market works via our learning area, where we publish video lessons every week.
5) Choose a strategy
Make sure that your chosen strategy does not clash with your personality type and risk tolerance. Some people like to take high risks for big rewards, while others will be satisfied with smaller profits and safer investments.
Make sure you choose a strategy that fits you: If you like to use technical analysis, start with a strategy related to that. If your style is more fundamental, learn how to incorporate dividend strategies into your investments.
6) Select the right broker
Find a broker that offers the financial instruments, timeframes and types of orders you need to create the exact strategy you are aiming for. Take note of their fees when executing trades, minimum deposit requirements, withdrawal times and other conditions (e.g., whether they offer different accounts). If in doubt which one suits you best, make sure to check out our reviews section, where we present all currently available Dutch CFD brokers in detail.
7) Start trading
After opening an account and depositing some money, it is time to become a real trader. Open your order book, place some buy or sell orders and have fun profiting from the price movements of financial instruments.
If you are new to trading CFDs in the Netherlands, be aware that learning how this works precisely can take some time. Use the demo account offered by most brokers for free to explore different strategies without risking any money or ask members of various trading forums about their tips and tricks.
If you are still hesitant whether this is something for you, consider reading some motivational interviews with traders. They share what motivated them to start trading in Europe or check out some learning blogs and sites that offer everything you need to get started successfully. Happy trading.