Using an Online CFD Simulator to Improve Trading Skills

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.

The Advantages of Using an Online CFD Simulator

Most losing trades make sense when seen in hindsight. But in fact, you can learn to detect them early, through probability analysis and an online CFD simulator.

An Online CFD Simulator for Evaluating Risk Control Methods

An online CFD simulator allows you to test theories and ideas on risk control. And to explore the hedging power of CFDs. So as to get around the riskiest periods in the markets. The biggest losing trades occur exactly because traders fail to focus enough. They fail to evaluate the uniqueness of each trading day, and the volatility risk. What usually happens is that traders are caught on the wrong side, trying guess market direction. And all this fear and confusion leads to closing the right trade. The right trade could be the one that is actually a losing trade at the time of taking action. That’s why probability analysis through both time and price data, is so important. Because unlike what your instinct tells you to do, the analysis will tell you otherwise. And the analysis will have a much higher probability of being right. To be exact, traders who employ such risk control methods don’t come up with a buy or sell formula. But rather with an algorithm, which has many steps and conditional decisions to go through. In some cases it will tell the trader to close the open trade, regardless of profit/loss. Because the probability of success is diminishing exponentially with the passage of time. In other cases, it will tell the trader to temporarily hedge an open losing trade with an offsetting CFD trade. Because the probability on a longer time frame suggests it’s the right thing to do. And through multi-time-frame probability analysis, it will finally tell the trader how to handle the open trade and the hedging trade. This approach saves the trader a lot of stress, and offers a map to navigate through the confusing markets. This is all tested and improved in an online CFD simulator.

Online CFD Simulator
The key to using probability analysis is understanding that things are not linear. As certain input variables change slightly, some output variables change disproportionately. The goal is to direct trading while the total probability for success is close to 1, and not to trade, or to hedge the open trade when the probability falls below a certain threshhold. The next step is to apply the theory on 3 different time frames, and this will provide guidance on how to handle things better, and what to do next with that temporarily hedged open trade. It is possible to eliminate a huge portion of market risk this way, and therefore to cut losses to amazingly low amounts. Remember that you will have to develop an algorithm, with conditonal decisions, where both time and price data will be used to determine the right decision to take, for handling open trades. So that a losing trade is not defined by just its current P/L figure, but by more data, including the elapsed time since valid criteria entry to the market.

The Market is Not always Right!

The urban legend says that the market is always right, but we don’t care about the latest price momentum. Because that’s what the legend refers to. We care about prevailing probability, and that’s what really matters. And moreover the trend is a function of time. A trader’s trend might be up, while another trader’s perception of trend is down. If you attempt to analyze the markets through probability theory and logic. You need to start simple, by applying your theory to 3 time frames simultaneously. So that you have one shorter and one longer time frame, while looking to start trading on the middle one. CFD trading news based strategies are not advised. As news trading is also a subject of intense debate, due to many myths taught. A CFD trading system works best when the benefits of CFDs are exploited, and when the trading myths are left out.

Testing Simple Concepts through an Online CFD Simulator

An online CFD simulator can be used to test hedging concepts based on multi-time-frame analysis. And concepts of stops in the time domain. Typically, some popular markets tend to have critical pivotal times. Which range from 20-30 minutes to around 3 days, for 5 minute and daily charts respectively. So day traders will consider closing open trades after 20-30 minutes, counting from exact entry conditions. When the entry to the market was made using the right criteria, and the time limit is elapsed, it makes no sense to wait longer. Probability favors closing that open trade and start planning the next one. Far too often you will see that you will be able to close marginally profitable trades before they turn into losing ones. That’s the basis for probability analysis, in a nutshell… But you can take things much further through more data and more advanced probability calculating tools.

10 Things to Know Before Beginning Online CFD Trading

Online CFD trading works better when the trader implements ideas and concepts for better risk control. After all, it’s more important not to lose than to win.

Online CFD Trading Tips

1 – Traders should take online CFD trading more seriously than other kinds of instruments. This is because CFDs do offer far superior trading performance through better liquidity and linear pricing.

2 – Traders should avoid using low risk-reward ratios. The idea of using low risk-reward ratios is about using stops of X size. While expecting to take profit at 2Xor 3X, which probability wise does not make much sense. The probability of making a profitable trade goes up when large risk-reward ratios are used.

3 – Traders who make make a lot of money in the financial markets do break some of the classic trading rules. Total obedience to such rules will prevent you from reaching your true potential.

4 – Online CFD trading offers the opportunity for enhanced temporary hedging of losing trades.

5 – Day trading on daily forex news does not really work

6 – An online CFD simulator does help in evaluating all kinds of trading ideas and strategies, as well as money management systems. It is therefore a very useful tool.

7 – Commodities and stocks are much better to trade through CFDs as opposed to direct access. You instantly have advantages over non CFD traders.

8 – Fibonacci theory doesn’t work in the financial markets. Wise CFD traders have figured this out already and have abandoned this method, along with some other flawed trading methods.

9 – Do pay attention to the US dollar. Markets that are dollar sensitive defy all technical analysis methods and signals. And it happens every time the US dollar moves due to geopolitical concerns.

10 – Take CFD trading seriously. It can facilitate very efficient retail size trading. Which is more than enough to allow a trader to make millions. Don’t be lured by brokers offering tax free, cheaper alternatives such as spread betting, futures, or even options. These instruments suffer from non linear pricing, inherent inefficiencies in fast trading, and very poor filling price.

Online CFD Trading
Despite the apparent complexity, many good traders rely on remarkably simple basic ideas, uppon which they build more and more. The traders such as the one in the picture can trade profitably while using only one screen and few charts. And only when there is no opportunity in that market, for that day, he looks for opportunity on the other charts. The bottom line is that it is really possible for retail traders to become millionaires, as the financial markets are so large in size that $1 million dollars is totally dwarfed by comparison.

Online CFD Trading Wins Hands down over Other Instruments, in Many Ways

Most traders focus too much on leverage and dealing costs. But the real benefit of CFDs is without a doubt superior efficiency. In reality, you don’t need more than 100 to 1 leverage in forex trading. And possibly no more than 200 to 1 in some commodities and highly priced stocks. All CFD trading accounts can facilitate sophisticated trading. And the future is very promising as these CFD brokers will be the first to introduce more sophisticated contingent orders and trading tools. Which means that traders who know their markets well will be able to do much more. Especially on risk control. The CFD trading platforms and the brokers as a whole are supported by superior liquidity-providing technology, which is second only to the more expensive ECN brokers.

Be Wise and Challenge Questionable Tips

Even profitable traders make mistakes when giving out tips. Just because a trade was very profitable and the trader used Fibonacci theory to plan that trade. But it still doesn’t prove the theory right. By learning to challenge and analyze these winning trades you will develop very sharp trading skills. Many books and seminars on trading CFD for dummies will inevitably include some false tips and ideas. You have to question things further, and take only the good part out them. It’s important to analyze your own winning trades in greater depth, to figure out the cause of success. Attributing winning trades to the wrong signal or method, will later lead to losing trades. Especially winning trades tend to be the most deceiving ones, because the trader feels too good about them… Online CFD trading will allow you to lieterally make millions by taking these facts into account.

The Forex Trading Business Opportunity for Starters

Grabbing the forex trading business opportunity is an elusive goal for many traders. As misinformation and poor planing prevent them from consistent profiting.

The Forex Trading Business Opportunity is Too Good to Resist

Forex trading as a business opportunity is indeed a very appealing one. That hardly anyone wants to ignore. The promise of low operating costs, and the potential for good profits, is very good. It is in fact much superior to many other classic business opportunities. This is because the forex market is a global market. Where it is in fact possible to profit, on a global scale. Business models which focus too much on the local economy are inherently limited in what they can offer. This is because wealth, as defined by money, flows one way. More specifically it tends to flow from large geographical areas to small big city areas. And it constantly loses value, due to to inflation. In other words, money is not really indefinitely recycled. It goes around and around several times until its buying power is completely gone. This is why countries must have open borders for global trade. And to make it easier for businesses to import and export over very large geographical areas. So, it’s not possible for a company to really survive, based on the domestic market alone. And moreover it’s not efficient for countries to be cut off from global trade. And to be self-sufficient. Economic theory has proven that best efficiency is achieved when each country is focused on few specific products and exports only. The forex trading business opportunity is a global one. And it is not limited by local boundaries. That is why it is possible for small forex traders to make millions. Whereas a small local business can never make millions. The local market is saturated, there is no volatility, no big opportunities and so on…

Forex Trading Business Opportunity
Money does not really go around and around for ever, as we were told in primary school. In fact, it is slowlly lost  due to inflation, and new money is coming in. Similar to how water goes down through a kitchen sink. Billionaires lose a lot of their money to inflation, in fact on a single million of US dollars, the average daily loss is around $150. That is if you put $1million in your house vault and keep it there, you will be losing $150 per day, out of its buying power. That’s why billionaires want to offest this loss through investing in very low risk currencies. These currencies are the ones that will be the strongest. But when they rise too much, the billionaire investors will want to take their money out, even for a small  profit. And the trend may start to lose momentum. But there’s no guaranty of a profit, even billionares can have huge losing trades in the process. Small forex traders study interest rates and currency trends to figure out likely market direction over the medium term. Just imagine the stress of these billionaires, and don’t always pick the most promising currency, the safest currency that just offsets inflation is usually the winner. But the small CFD trader profits on a much larger scale, out of tiny moves in that currency, because of the leverage used.

How to Grab the Forex Trading Business Opportunity

The forex trading business opportunity is a realistic goal, only when traders know their risks. Traders who want to trade forex online for the first time, and who need training. These traders need to study the global economic problem, and how big currency investors think. The way to avoid poor planning and bad strategies, is through in-depth understanding of global trade and investing. If you rely too much on technical indicators and popular trading methods, you will only scratch the surface. The forex trading business opportunity is peculiar and obscure. No amount training can fully prepare you for the challenges ahead. First, you will have to give up the notion that some billionaire trader out there knows the markets inside out. Because nobody knows the markets this good. All investors, even billionaires stand to lose big money in the forex market, nobody is exempt from market risk! Moreover, because of inflation, all these billionaires are constantly losing money. So they are always looking to put the larger part of their money in low risk, low yielding currencies, just as long as the yield offsets inflation costs.

Don’t Settle for Average Profitability

The forex market is risky, but also profitable. When trading as a business you need to be selective in your trading. Stay out when the markets are tough to beat. And trade with more money when the markets are good. The idea is not to match the profitability of successful traders, but rather to exceed it! So much of profitable traders’ advice will not necessarily be useful to you. Trading is very affordable today, and most CFD forex brokers minimum deposit is no real obstacle to starting trading. You simply need to implement selective trading, use money management, and avoid excessive leverage. The rest of the work is on the trading front. And remember that this is a global business, where market conditions create unsaturated situations, where one can profit easily. But when conditions change back to normal the same strategy will not work again.

Basic Best Forex Trading Strategy Tips for Beginners

The best forex trading strategy new traders can use boils down to personal choice and reality checks. If the strategy requires skills, it’s probably a good one.

The Best Forex Trading Strategy

The best forex trading strategy is one that involves trading either a commodity currency, such as USDCAD. Or a currency pair that is not impacted at all by any commodities and the US dollar. In the case of the latter, traders need to choose carefully. A truly independent currency pair where the risk of the US dollar is removed. As well as commodity market risk. Such a currency pair can be predicted through analysis on the related local economies. Beginners will have a hard time trading any US dollar cross. Even USDCAD is often confusing, but because of its strong correlation to crud oil, it tends to obey technical analysis strongly. Learning how to trade forex through a truly independent currency pair, will offer less confusion. In any case, the pairs to avoid are popular pairs, such as EURUSD. Even though this is the largest pair, by trading volume. The confusion is enormous, and there is no evidence that EURUSD leads over other correlated markets. EURUSD can be a follower pair just as easily as many other markets. The truth is, most popular currency pairs are difficult and too confusing to trade.

Beginners are Impatient

Beginner traders are usually impatient and want to reach success overnight. They want o literally trade for a living very soon. Thinking that they are smarter than everyone else out there. And yet, at the same time they do use trading tips which are at least partially wrong. Classic trading rules and tips are for the most part not relevant to actual trading. If they did work half as much as their reputation hints. Then profitable trading would be piece of cake. Beginner traders don’t question the validity of these rules and tips. Because they think that the older generation of traders has figured everything out. Beginners can trade forex online, starting with a simple currency pair, ideally not a popular one. They should rely more on chart price patterns over all other indicators. And partially on longer term fundamentals. The probability of success increases dramatically if also the daily news is ignored altogether. Attempting to make sense of the daily news is impossible. And even those that use it, use it as a volatility and momentum indicator. And not as a price direction indicator, as many commentary articles will have you believe. These articles have to make a big deal out of the daily news. But news itself is as good as useless for determining market direction. You cannot expect to develop the best forex trading strategy if you attempt to decipher the daily news. It just won’t work at all, so it’s best to by-pass the daily news. By using it as a simple volatility indicator and nothing more.

Best Forex Trading Strategy
There is no hidden treasure in the daily forex news. The industry pushes traders towards high frequency trading, and wants to make a big deal out of the daily news. Which makes beginner traders far more likely to lose. If they focus on more relaxed trading instead, they will have a far better chance of making it through to good and lasting profitable trading. News is only a volatility indicator. Beginners can trade selectively, and still risk up to 30% of their account in any good trading week. And they will have a much better chance of developing the best strategy. That’s where the treasure is really hidden. High frequency trading is okay at later stages, but still it should be done without looking for direction clues in the daily news. The safest way for high frequency trading is scalping, during very low volatility hours.

Best Forex Trading Strategy for Small Account Traders

Small account traders can implement trading strategies on the above tips. It is a good idea to have sufficient funds in their accounts and risk up to 25% or 30% of their balance in any active trading week. Risking less than that over any good trading week, will result in limited market exposure and low profitability. It’s best to use up to 30% in all active trading weeks. And just be more selective, and not trade at all during weeks where volatility doesn’t favor your strategy. Some strategies require high volatility, and some others require very low volatility. In all cases, a good CFD trading account can facilitate forex trading, allowing you to capture even minor market moves. And to even implement scalping trading. All these tips can make up the best forex trading strategy, for all beginners.