Online CFD Analyses and Testing of Trading Ideas

Traders perform online CFD analyses, using simulator and risk control tools. Their goal is to uncover and hedge potential risks that could blow their accounts.

Online CFD Analyses for Detecting Hidden Risks

Online CFD analyses come in many types and forms, all for detecting different hidden risks. Some traders for example are afraid that their trading is vulnerable to extreme and sudden geopolitical risk. The US dollar and its crosses are all currencies subjected to this risk. This risk is almost impossible to predict. And even those who can predict it come up with poor forecasts, where the prediction spans over many months, so timing is very poor. Traders however can find markets that will move sharply, in one direction when a given specific risk happens. Online CFD analyses allow them to model such risks, and also ways to hedge their trades through those risk-benefiting markets. Many currency pairs in the forex market are subjected to such risks on a daily basis. Yet, some forex strategies manage to eliminate as much as 90% of the risk. The 10% risk means that the market could 1 out of 10 times move in totally unpredictable ways, due to natural disasters, terrorists attacks and so on. During that 10% of trades, the trader may or may not lose money. There is roughly 50% probability that the hedging trade protection will work. But because there is still randomness, similar to a coin flip outcome, it is thought to be a 50% risk. Risk however doesn’t have to result in massive losses, the trader can act quickly when things go totally wrong, and close all trades. So it is okay to win small and to win big, 90% of the time. While breaking even or losing on the remaining 10% of trades. Factors impacting markets to extreme levels are volatility, natural disasters, terrorists attacks and unforeseen economic events. Typically anything that is bad, tends to happen very fast. Whereas good events happen slowly. This is important in devising a hedging trading idea. The US dollar remains even to this day a key currency. But one that is totally unpredictable at times. Because geopolitics can come in and override all economics, for days or weeks. Unprepared forex traders are not aware of this, and a sudden such move on the US dollar usually is enough to wipe out their trading accounts. Because they still hold onto economic and technical analysis and add to the losing trade.

Online CFD Analyses for Energy and Precious Metal Traders

Gold and crude oil CFD traders focus on supply and demand for the days and weeks ahead. The forces of supply and demand are critically important. But these come down to investor fear, and to a lesser extend, down to the US dollar. There is no clear cut relationship between the dollar and commodities. Sometimes both the US dollar and the commodities can rally hand in hand, for weeks. Various in-depth online CFD analyses offer these traders insights into how many risks can be hedged through CFDs. Because trading CFD offers linear hedging and profiting, and unrestricted access to the market. They can rely on CFD instruments more than any other. But this doesn’t stop them from investigating further, and staying within the safety limits. CFDs are extremely good and superior trading instruments but still not perfect, their benefits are limited to $100 per pip. Above this level, liquidity problems will probably arise. So very large size traders may not be able to use them in full. But to small and medium size traders and investors, they are the top tool in their trading arsenal.