Using an Online CFD Simulator to Improve Trading Skills

By Content-mgr - on November 8, 2016

An online CFD simulator is more than a testing platform for your trading skills. It can also facilitate research into advanced hedging methods and risk control.

Online CFD Simulator and CFD Advantages

All the hidden benefits of CFD instruments, as well as advanced risk control methods. Can all be explored through the use of an online CFD simulator. All traders have new ideas, some of which might be quite unusual and good. Traders often lack the confidence to implement these ideas in their live accounts right away. And this is understandable since an original idea, in its crude form is not a complete trading method. The biggest concern of traders is dealing with risk control, so as to minimize losing trades. Or even detect them early enough through probability evaluation. So as to close the would be losers while still at their breakeven level. Probability theory is very powerful in trading, because the market does provide the clues. CFD contracts are very powerful in controlling risk through temporary hedging. Since all losing trades can be hedged with an opposite trade. Traders who do active hedging essentially lock all market risk during high risk times. When risk comes down, they take the hedging trade out, or whichever trade of the two, that is in profit. CFDs are extremely linear in their pricing, and so maximum protection and profit is achieved.

Online CFD Simulator and Psychology

Traders can also explore their psychological weaknesses through an online CFD simulator. Even though it’s virtual trading, and critics would argue against it. Simulation does help not just traders, but all kinds of professionals, identify weaknesses in their training. Therefore simulation is highly beneficial in trading as well, despite critics’ theories. Moreover, risk control and psychology are strongly related. The more one can control market risk, the more confident they will feel in live trading. After all the process of trading is identical in their CFD trading platforms. And good habits bring more good habits. So there is no base for critics comments on simulated trading. And don’t forget that all traders do some sort of simulated trading either on paper, or in their heads. Critics just love to brag about the real thing too much. Citing that only live trading will shape you as a trader. On the contrary, live trading without simulation experience leads to unnecessary psychological pressures and narrow-minded situations. An online CFD simulator is a great tool, and simply an extension of a logical or mathematical theory. All of these are tools of simulating the real world. Think how probability theory seems so abstract and remote. Yet it can describe and predict the real world much better than a human making random decisions on the spot.

Online CFD Simulator
The power of theoretical analysis is enormous, as it can perfectly simulate the real world. Even beyond the visible and tangible domain. Robert Oppenheimer was a theoretical physicist, not a practical scientist,  who never saw or touched individual atoms. And yet his theories were formulated right, and he solved all technical problems one by one, on the blackboard, until he made the first working atomic bomb. Something that in universities at that time, it was taught as impossible…  Critics of simulated trading today fail to pay attention to advanced analysis and testing methods, for the purpose of trading, the fact is, all theoretical analysis, probability theory etc, are ways to simulate, and eventually predict the real world. So critics of simulated trading, paper trading, and theoretical trading, are very wrong!

Probability Theory and Simulated Trading are Both Misunderstood

Probability theory requires sharp analytical skills. As well as the willingness to employ all mathematical tools to simplify formulas and expressions. Probability theory is the most powerful way to simulate and predict important aspects of the market. Once again, critics of simulated trading are wrong. Because trading the live markets, at random, without any preparation, does not allow you to gain experience. Even though it’s live trading, the trader will be oblivious to many probabilistic aspects and patterns. All good online CFD brokers are compatible with well theorized trading. Based on probability theory. And as always, it is theory that simulates the real thing, and also leads progress. Everywhere you look in the world around you, it’s theory first, implementation later.

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