Trading CFD tips can help struggling and losing forex traders improve their trading dramatically. Some concepts are explained and presented as food for thought.
Hot Trading CFD Tips for Losing Forex Traders
There are many trading CFD tips. The most important in our opinion is the ability to judge a trade before it becomes a loser. This can be achieved by developing a notional stop strategy, in the time domain. You can still use price based stops, preferably large ones. But a notional stop in the time domain, will warn you in advance. And it will allow you to close that would be loser, before it becomes a loser. One of the best trading CFD tips for the average forex trader is the notional stop concept. It works well on day trading too. The trader simply allows for a maximum of 20minutes to 30 minutes of waiting time, for the trade to prove itself. If the market fails to move in the trade’s direction, and the time has elapsed, then the trader closes the trade. And oftentimes they manage to trade would be losers while they are still at break-even level. This alone saves them $1000s in avoided losses. Why wait for price to trigger your stop, when you know that specific time limits can be used as notional stops. Stops in the time domain are based on probability. It’s simply the idea that if something seems to be taking too long to happen, the probabilities favor that it will never happen! It’s a fact of life, and of market price too. You can learn how to trade forex this way, and cut your losses dramatically. First do some research on your favorite currency pair, and do some hypothetical trades in your head. Do it using various time limits, and test to see what would happen if you exited the losing trade, or if you reversed direction. Always based on that notional stop in the time domain, which puts a time limit on waiting. You will see that the market does in fact obey some kind of probability, and staying in a trade too long is not a good idea.
More Trading CFD Tips
Another one of the best trading CFD tips is that of forex time zones. If you combine it with the tip on time domain stops, you will have much more clarity and confidence in your trades. Currencies tend to make their biggest moves during active trading times. These are the times when the countries of the corresponding currencies in the pair, are open for business. And it’s usually the daily business hours when stock and commodity markets are open for trading in that country. So EURUSD is likely to make a move when either Euro or Dollar related news hits the market. When does this news hit the market? When either London or New York markets are open for trading. So even though forex trading works 24/5, you can see that some trading times are more important than others. Now go a step further, and look into the active trading time zone of any currency pair, where a move is expected and most likely to happen. And apply notional stops in the time domain. So that if the market fails to move, and more than 20 or 30 minutes elapse, you get out. Does this help you limit losses to a minimum, and still capture profits? If so you will make progress. But remember that is more important not to lose, than to win. So use large stops in the price domain, even if you are a day trader. And use tight stops in the time domain. Tight stops in the price domain are for the naive and the delusional out there. And instead of protecting your capital, they cost you dearly. The same applies to stops placed near yesterday’s high or low, or near daily LSS pivots. These levels are bound to be tested daily by the market. CFD trading platforms allow you to implement nice time zone based forex trading, and to handle your trades very efficiently. At phenomenal liquidity. CFD trading platforms may even include stops in the time dimension, in the intermediate future.