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How to get real-time trading experience

without risking too much money

CFDs are not for beginners and this is why CFD brokers won't let potential customers open an account unless they know what they're doing.

Due to FSA regulations clients must be classed accordingly, so-called 'intermediate customers'. This means they know and understand the potential perils of dealing with a margined product.

How to get real time trading experience
So how does one get market experience?

Use Spread Bets to get comfortable with margined products.

Spread Betting also uses margin but its advantage for beginners over CFDs is trading positions can initially be kept small. For example, if you buy the FTSE 100 risking £0.50 a point and the market moves 150 points against you, the loss is a manageable £75.

So open a spread bet account, fund it with £200 - £500 and try to trade between 2 and 10 times a week with small stakes. Then if you lose it won't matter too much as your losses over a period of time should be no more that £100 - £300.

Plus, don't discount the benefit of losing money as it's often a great educator, ie it tells you what you're doing wrong and perhaps what needs to be addressed, for example -

  • Letting losses run too far
  • Not using stops losses
  • Too much short term trading etc

Then, when you've got the experience of margined products, know how they work and the potential risks you'll be ready to open a CFD account.

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