Day Trading and CFDs – The Facts of Online CFD Trading

By Content-mgr - on September 11, 2016

Online CFD trading enables many wise traders and classic investors to reduce volatility in their stock portfolios. And to also profit from tiny market moves.

Online CFD Trading Offers More

Online CFD trading offers more to traders and investors, much more than any other trading instrument. To those that know what they are doing, and how to handle market risk, CFDs are priceless. Of course, there are many less experienced CFD traders who are losing money. But even when one is losing money is still better off with CFDs. Even the worst traders out there. Because they would be losing more and faster, had they been trading through other instruments. And this is has to do with the superior liquidity and linear pricing of CFDs. Even in a losing trade, on average, you lose less than you would through any other instrument. That’s the harsh reality of financial trading. Markets are tough to beat, most traders lose, or simply struggle too much. The trading efficiency of CFDs cannot make you a winner overnight. Traders make their own decisions. CFDs and other instruments are only vehicles for implementing those trade ideas. No CFD trading system is complete without a wise and experienced trader at the controls. Even the best trading system will fail to make money in the hands of an amateur. That’s a proven fact!

Don’t Let Anyone Fool You into Believing that Profitable Trading is Easy

Online CFD trading only becomes profitable after making a serious commitment. Trading in general, doesn’t become easy before going through a long and painful learning curve. Only traders who have been through many hard times, are able to now trade easily. CFD trading however can enhance many retail trading strategies and concepts. From day trading to investing-like trading. And the longer one trades, the more apparent the benefits of CFDs become. Since every losing trade loses less money, and every winning trade makes more money, that they would otherwise. Investing in foreign currency markets through CFDs is also perfectly possible. As CFD trades can be held for indefinitely long. It is wiser to start trading on the longer time frames first, and then move onto the shorter ones. Because risk and stress management are hard to manage in fast moving markets. Day trading is a good choice for those who have already used CFDs in longer term trading, and know how to use them best. It is also wise to stick to one familiar market, and do day trading on that.

Online CFD Trading
Market makers’ actions can be at least partially seen through level 2 stock quotes. This applies to crude oil stocks, gold stocks and other commodity related stocks also. And this is day-trading information. However, it can be used wisely on days where a commodity such as gold or crude oil, has a strange trading day, which was not expected. By studying level 2 data on the related stocks, one can figure out why market makers bought or sold these stocks. If for example they bought systematically and aggresively a gold mining stock on that day, one that is strongly correlated to gold price, it means that the buying action will likely continue the next day. And therefore this should be seen as a possible buy signal on the commodity itself. This is only useful one day at a time. But it can be perfectly well applied on critical trading days, where a commodity breaches some pivotal price level and we are clueless on direction. A false market move can be identified in such cases.

Online CFD Trading Using Level 2

Using level 2 data is a very interesting way to explore day trading. And it is also useful for assessing signals on the daily chart also. Level 2 data is for stocks only, but stocks can be highly correlated to some currency or commodity. Therefore don’t make the naive assumption that level 2 stock quotes are only useful for trading stocks. You can use level 2 quotes for monitoring market makers actions on few key gold stocks, and then trade CFDs on gold itself. Gold is a commodity, and commodity specialists will know more about it than anybody else. But the same specialists also trade gold stocks. So it is possible for example to assess a breakout day in gold through gold stocks and their level 2 data. One can see if there are enough buyers in the market, and if their orders are filled.

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