Trading Plans and Discipline · CFDs Trading Guide

Several small positions can behave like one large trade. Portfolio limits should capture shared drivers rather than count how many symbols are open.

Map the common drivers

A long technology index, several technology shares and a growth sensitive currency can all respond to the same change in rates or risk appetite. Different symbols do not guarantee diversification. Group exposures by economic driver, currency, sector and direction. Include investments outside the CFD account when assessing the total financial picture.

Keep multiple limits

A maximum planned loss per trade is useful but incomplete. Also define total open risk, gross notional, concentration and minimum cash buffer. Record how pending orders count toward these limits. A position can satisfy its individual rule while causing the portfolio to exceed an acceptable combined exposure.

Stress simultaneous losses

Suppose four positions each have $125 of planned stop risk. Their total is $500, but a common shock that doubles each exit loss produces $1,000 before costs. Add the effect of wider spreads and changing margin requirements. Historical correlations can rise during stress, so a model should not rely on normal conditions continuing.

Reduce risk through clear actions

When a limit is breached, define which positions or orders are reviewed and who makes the decision. Do not increase unrelated exposure merely to make a percentage statistic look balanced. Recalculate after substantial price changes, withdrawals or new trades. A risk limit works only when it leads to an action before the account reaches a forced close out.

Try it yourself

A plan limits total planned open risk to $400. Existing trades use $150 and $180. A new setup needs $90. Does it fit, and how much capacity remains before it is added?

Show the worked answer

Only $70 remains. Adding $90 would raise planned open risk to $420, above the stated limit. The plan requires reducing or declining exposure, not ignoring the difference.

Further reading

Educational material, not a recommendation to trade. Numerical examples are hypothetical. CFDs involve leverage and substantial risk of loss. Availability, costs and protections depend on the contract, legal entity, jurisdiction and client classification.

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