Buying Index CFDs is a great opportunity to create an extra source of income. Money must work to bring you more money, that is why we want to share some of the best investment strategies with you, so you could start doing it too!
Today We are Going to Talk About the Following Strategies
● Buy-and-hold
● Buy-low, sell-high
● Breakout investment strategy
Buy-and-Hold Strategy
The whole idea is self-explanatory by its name, you have to buy some Index CFDs that you believe in and hold them for an extended period of time regardless of what is the current situation on the market. Your ally here is the time, the more you hold your assets, the higher the chance of huge profits.
‘Buy-Low, Sell-High’ Strategy
This strategy might look similar to the buy-and-hold tactic but it has a distinctive feature. The whole idea is to buy Index CFDs when they are depreciated and selling them when their price is at its pinnacle. In order to use this investment strategy, you must perform the market analysis to determine when the price is low enough (underrated) that it’s worth buying in. The same for exit points, the trader has to be well aware of the situation on the market to understand if it’s worth to sell the asset and exit the deal.
Breakout Investment Strategy
This strategy requires the knowledge of levels of support and resistance (S&P). In general, people using this strategy determine the level of resistance and buy-in only when the price surpasses this level (performs a breakout). When the breakout happens, the price is likely to continue its growth in the future, thus, generating a profit for people that have bought in at the right moment.
Choosing the Optimal Trading/Investing Strategy
There are no strategies that will be convenient for everyone, while picking your strategy you must think about risks, time, and profits. For some people, it’s crucial to have a stable and concrete low-risk low-reward strategy. Some traders prefer to get themselves into risky deals that can bring huge profits over a short period of time.
One thing is common for everyone, it is better to spend some time in the market than to time the market.
“Spending time in the market” means a long-term investment when the buyer keeps his assets for a decent period of time. It is proven that the buy-and-hold strategy has the biggest rate of return over time, which is displayed on the “FTSE 100 total return” chart.
To “time the market” is to predict when the price is low enough to buy the asset and then predict when it’s high enough to be worth selling it. As an example, lots of investors managed to cash in on the swift drop in the stock prices caused by Covid-19, buying shares for a small fraction of the real prices and selling them the moment markets began to recover.
Here is a real example, below we can see the price chart of Dow Jones. The price was dramatically affected by the global Covid-19 outbreak, achieving the all-time best in February 2020 and dropping by 33% in just a month.
Always Do Your Own Research When It Comes To Investing
It is obligatory to remember that there is no perfect time to invest. You are the one taking risks and your decision is the final one, so you must be well aware of the potential risks that you take. Perform your own fundamental and technical analysis indicators to understand either it is a good time to buy-in
