Online CFD Simulator for Testing Trading Skills

By Gergios Vergakis - on March 24, 2016

Using an online CFD simulator can help you understand the benefits of CFD trading in great depth. Concepts of hedging and hybrid trading can be put to the test.

Using an Online CFD Simulator to Test a Trading Idea

Putting trading ideas to the test, through the use of an online CFD simulator is a very insightful experience. Unlike Futures and Options, CFDs offer straightforward, linear pricing. If the trade works in the simulator, it will also work in the real market. Simulated trading doesn’t make it easier to win, except that you can run many different tests, without risking funds. Online CFD simulator software can also be used to test hypothetical trades against the concept of using notional stops in the time domain. Various currency pairs tend to exhibit different properties on this. Some pairs though do have specific time limits, where you can safely make the decision to close or reverse the trade. Trading forex after these tests, using online CFD dealing, will set you several years ahead in the learning curve. Simulated trading helps reveal overlooked aspects of the markets, while revealing your money management weaknesses. This is because you can see at all time what your account drawdown is. And how much risk you could possible take in live trading. You can also extend to long term commodity trading. Since gold crude oil and other commodities set solid trends from time to time. These offer an alternative trading choice at time when your favorite currencies may be too confusing to trade. Long term trading is really investing together with some protective trades on the other side. But CFDs are better since you can actually profit even from falling commodity prices. Commodity investing is a lot like investing in foreign currency. Except that there are no interest rates involved.

Online CFD Simulator
Simulation is about accurate measurement of quantities and events. CFD trading is more possible to model, than even the underlying spot markets. These spot markets may impose access restrictions from time to time, or have liquidity problems, which cannot be predicted and simulated. But CFDs get around these adverse conditions, allowing for ultra-realistic accuracy, where simulation can predict live trading results.

Online CFD Simulator Use for Struggling Traders

If you are a former losing trader, or someone who is simply struggling on their live account. Then using an online CFD simulator will help you identify at least some of your biggest mistakes. Most traders lose money because of using tight stops, and not paying attention to volatility patterns. This virtual trading is not real, and yet it is so accurate through the linear pricing of CFDs. So that trading mistakes due to tight stops and adverse volatility, can be identified with remarkable accuracy. This gives you plenty of time to focus on studying the market, and seeing things from a new perspective. Futures and Option traders cannot do this. Their simulation may be perfect, but if another variable in the pricing of these instruments changes (without the market trading differently). Then the trade may work out significantly differently. Futures contain variables relating to future expected market price, and Options are even worse, as a tiny variable change can yield a losing trade even when the market moves in your favor. That’s why virtual trading only works with the spot market, and CFDs in particular.

Online CFD training can help struggling traders improve on their judgmental skills. So as to be able to evaluate open losing trades much better. Remember that all trades start out as losing trades! Choose a strategy that allows for larger than normal stops. And pay attention to mental stops in the time domain. According to time based analysis an open trade may be considered as a losing, doomed trade even though it is currently at partial profit.  This is because if several days have elapsed and the open trade is at minimal profit, the probability of success may be evaporating fast. And when the probability of success is evaporating fast, what will prevail is risk. And the nice looking trade will turn into a big loser. Simulated trading allows you to assess and improve your skills in that regard. By taking online CFD training a step further rather than just following nonsensical classic tips, such as cut losses short and let profits run…  which is a useless tip, because it doesn’t define which is which. By watching many simulated trades you will develop a kind of sixth sense. Which will allow you to see the real losing and winning trades. Objectivity is very high in simulated trading and even in small trading accounts. Traders start to lose objectivity when jumping directly into large trading because the money at risk gets them emotional. Yet those who have experience in simulated trading stand a much better chance handling larger real money trades.

Write a comment