Trading CFD without Leverage

By Content-mgr - on July 17, 2016

Trading CFD with low, or no leverage at all is a good choice in some cases. Especially in CFD accounts where the objective is to trade commodities or certain types of stocks. Some stocks for example, such as penny stocks and low price stocks in general are easily affordable at 100% of their value. So not using leverage allows the trader to feel comfortable without worrying about having to meet margin calls. Trading CFD is extremely profitable in the case of low price stocks, in the hands of even partially experienced traders. These stock traders don’t fit the profile of neither classic traders nor that of classic investors. Rather, they are somewhere in between, and their CFD trading systems use logical analysis of all levels. Such stock traders may have small or even large trading accounts. They simply don’t want to worry about potential margin calls. So they use low leverage, or no leverage at all. And apply similar money management that classic buy and hold investors have been using for years. Online CFD brokers facilitate very good trading conditions which make profitability possible. Above all, they like stock trading of this type, because each stock has a different story to tell. And each company is chosen and analyzed by different criteria. This is why logical analysis prevails over all other, one-sided analysis methods.

Trading CFD with no Leverage — New ideas may be new products and breakthroughs of new companies, after the IPO. Or new strategies of long established companies with small past success, which have deceptively cheap stocks. If the company becomes a takeover target, the stock will go up. But even without a takeover, profitability for such a company may be huge. Due to not having good prior economic numbers, classic valuation models will tell you that such a stock is worthless (no past sales, low profitability etc). Only logical analysis investors will figure it out, and will also make non-leveraged, affordable CFD purchases on that stock, because it will be a cheap stock to buy.

Trading CFD through Logical Analysis

Trading CFD through logical analysis is all about company uniqueness. So that two companies in the same sector are never considered to be alike. Hence their stocks are expected to perform differently as well. Logical analysis is about analyzing technological trends. And how technology and new products render other products obsolete. Most of these trades are based on time frames of around one year long. But many more smaller weekly and monthly trades can be made over that period. Stock CFD traders want to see stable trends, and trades they understand. Penny stock trades also work the same way. As most penny stocks are relatively new stocks, without much prior history. Classic stock valuation models will tell you that such stocks are worthless, or that are exactly right priced. But these models fail to deal with logical analysis, and always fail to predict penny stocks that break out. In general, it is not wise to apply technical analysis or fundamental analysis to any new, low price stock. The question is what does the underlying company do, and how likely it is to succeed. If it is going to be successful, most classic analysts will be oblivious to the signs. Stock traders can infer good CFD trading signals from this logical analysis. And because most of these stocks are very cheap, there is no need for much leverage.