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How to Get Started in Online CFD Trading

New traders interested in online CFD trading need to know how to make the best out of CFDs. CFD contracts are more about a liquidity edge, and not leverage.

Online CFD Trading for Superior Market Exposure

Many would have you believe that CFDs are all about high leverage and affordable access to the financial markets. But that’s not a very exciting reason to choose CFDs for. Leverage is also found in futures, spread betting and options. Online CFD trading does work best with leverage, especially leverage of 100:1. As all traders, more or less, need to increase the buying power of their money. The real advantage of CFDs however is with liquidity and linearity. These two benefits make CFD instruments far superior to any other trading instrument! Sometime the difference is so huge. That the profitability of online CFD Trading is more than twice that of other instruments. All other instruments offer affordable leverage also. But their pricing is horrible, and highly non-linear. Which means they are not following the market price closely enough. For you to make a profit out of small market movements. And 70% of the time, the market only offers small movements. So it is important for new traders to recognize the key benefits of CFDs and use those to gain an edge in their trades.

Hedging through Online CFD Trading

Traders of many markets, can also hedge many risky trades through CFDs. All because CFDs offer just the kind of superior linear pricing that a hedging trader needs. Any hedger who knows how to trade CFD contracts to temporarily lock in an open loss on another trade. Knows why this is so beneficial. Most of these trades are assessed by the trader, within few hours or days. Trades that are believed to be totally wrong, are closed. And trades that are believed, upon evidence, to turn around, are kept open. CFD based hedging enables the trader to save $100s if not $1,000s on all losing trades. Both temporary and permanent losers. This is where pricing linearity is really priceless. And the superiority of CFDs is best revealed. But CFDs are also more liquid. Traders are very likely to get the best filling price and without delays. Most of the time, and even in hard, volatile market conditions.

Choosing a CFD Broker and Guidance

Traders need to choose a CFD broker, one with a good reputation and feedback. New traders can safely do so by looking among brokers having satisfied clients and good ratings. CFDs and good CFD brokers can’t guarantee trading success. It’s common sense to expect to face confusion and ambiguity in the markets. Just remember that even the best traders out there face the same problem all the time. It is not possible not have any losing trades, or not to be wrong. But it is possible to trade profitably. And this is where a basic CFD guide comes in. A basic CFD guide, with a focus on one particular market, is really useful to have. New traders should think like specialists, and should focus more on one commodity. By starting trading this way, and studying one commodity well, trading will be more solid. As commodities are much less confusing than other markets. They are still difficult to predict, impossible to predict in all time frames. But it is possible to have predictability around 30% of the time that a commodity market trades. Which is more than enough to allow for profitable trades.

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How to Get Started in Online Forex Trading

Online forex trading is more than just day trading and fast moving prices. As large size market participants and investment banks look beyond the trading day.

Good Online Forex Trading Requires More Data

Online forex trading can be made much more successful. When traders take into account relationships between different countries and their economies. Even geopolitical events, and pure political decisions actually matter in FX trading. Apart from the usual fundamental data such as interest rates, economic growth, and inflation. The currency markets are also slowly but surely impacted by politics. Any decision that lessens the diplomatic power of a country. Will weaken its currency. Whereas decisions such as increasing military spending. Or spending billions in the next generation of nuclear weapons, will help make the currency stronger. Because political decisions such as these help make the reputation of a country much stronger. And foreign investors will only invest in currencies of serious, reputable countries. Attempting to forecast a currency based on economics alone, fails to deal with the reality of global trade. Global trade requires security and a sense of peace of mind. Which banana republic countries fail to provide… This makes forex trading even more interesting in the medium to long term. Because the market can easily defy bad economic news. This is certainly the case with the US dollar. At times of seemingly bad economic news. Where the right amount of diplomatic and political strength can easily sustain rally. Some forex traders test such long term trading ideas, through trading online demo accounts. The idea is to explore the possibilities of carry-trade strategies. Which are themselves long-term in nature. And to use both interest rate differentials, as well as geopolitics, in a largely funded account. In order to simulate such currency investing.

Online Forex Trading is a Serious Business

Online forex trading is seen by many traders of medium term market exposure, as a serious business. Something more than even just an investment. Just like large investment banks and large size carry-trade investors. There’s so much more to the market than just the typical economic data. And even though the economic cycle is somewhat repeating itself, making it predictable. Geopolitics and international diplomacy is unique, and exciting. A recent rift for example between the EU and Russia, brought about trade sanctions on both sides. As a result, some countries are banned from exporting to Russia, while other countries outside the EU have to export much more to Russia. The economic impact on the currencies involved is easy to figure out. But there are currencies, less obviously involved, which are also impacted by this rift.

Why the Medium and Longer Term Trends Matter So Much

All forex traders are impacted by week to week trends in the market. These trends are often hard to figure out, due to all the volatility. All technical and fundamental analysis tools provide ambiguous opinions and even more confusion. Is is only when traders think like investment banks, where they can look into the next 3 or 6 months. And think in terms of basic economic numbers, as well as geopolitics. The expectation is that the market will certainly defy some data. And that data will likely be some economic numbers. For example an economy may weaken, but the national currency will still go up. Or an economy may improve dramatically, and yet the national currency will depreciate, defying all economic analysts. Traders will still resort to trading live Forex rates in real time day trading. And in day to day trading. But the medium term market outlook will help them have a basic road-map. So as to assess market reversals and avoid major false moves.

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Best Strategies for Becoming a Top Forex Trader

The Wise Forex Trader Does Not Believe in An Ideal World

The wise forex trader knows that the world is not perfect. Neither are the various market analysis methods, all of them are expected to surprise at some point.

The Wise Forex Trader Expects Trades to Go Wrong

The wise forex trader expects their trades to go wrong, most of the time. And they start to worry when all indicators agree with one another and they seem to work in harmony. People pursuing perfection and perfect sense in forex trading end up finding out that the markets are not perfect. They simply cannot be modeled and predicted in any perfect way. Online forex trading is governed by rules of uncertainty and risk. There are no absolute objectives to accomplice, because the market does not allow for such naive trading strategies. And yet, this is what most people would expect to achieve in the markets. Because in some other aspects of their lives they have a lot of control and can make some perfect predictions. The markets are not like that, and it is naive to even think that someone out there has all the answers. As if the markets are run by some secret code that it is possible to crack. The humble forex trader knows that the world is not perfect, and neither are the markets they trade. So indicators and methods of analysis will be somewhat messy at all times. That’s why forex trading is so tricky and difficult. And all this inherent risk is what makes the markets work.

How the Wise Forex Trader Trades

The wise forex trader maintains flexibility in their trading account. Therefore all trading strategies used must offer flexibility. CFD trading accounts offer the infrastructure needed to implement such flexible trading strategies, the rest of the work is up to the trader. The best strategies for success offer all this flexibility. And as a result, the complexity of the markets cannot put them out of balance and into unsustainable losing streaks. Whereas rigid, well defined strategies either fail to engage the markets long enough, due to small size stop loss orders. Or they are whacked out of balance by the markets, to the point where losses are not sustainable.

Best Strategies for Success

One can trade forex profitably by employing large size stop loss orders. Notional stops in the time domain, and hedging tricks for limiting some of the losses on the trades gone wrong. And not surprisingly, after doing basic research traders will find that they are better off using high risk-reward ratios. Ratios that forex educators usually do not approve. By working upon these principles alone traders can achieve greater flexibility and absorb the shocks on their accounts, induced by the forex market.

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What Traders Can Learn from Digital Games Like PokemonGo

Online CFD trading seems simple and straightforward, but there is much more to it than meets the eye. Savvy traders take things further with complex strategies.

Online CFD Trading is Necessarily Simple Just Because CFDs are Linear Instruments

Online CFD trading offers a great domain for trying out new strategies and ideas. Some of which include trading the financial markets in neutral – partially directional ways. The younger generation of traders is quick to adapt to such challenges and try out brand new ideas. Because they are used to playing online strategic and thought games. Such as multi-player war games, and games of skill such as PokemonGo. So these games do require the player to think originally and act wisely. And just like in real life, the exam comes first and the lesson later… Games of mental skills and original thinking do stimulate players to think on their own. As opposed to laid back people who never take up a challenge. Online CFD trading can be seen in two totally different ways also. Laid back lazy people believe too much in their wealth, and that money has the solution to all life’s problems. So they think successful CFD dealing is all about having a huge trading account. And buying the best available information or training course. But this is not true at all, the well-off are actually at disadvantage when it comes to online forex trading, because they only see the simple directional trading strategies. And they lack original thinking and new ideas. Poor traders on the other hand have to think differently and do more with less. Which means using a smaller CFD trading account, in many more ways than the average rich trader may do.

Online CFD Trading Offers Equal Opportunity for All

Online CFD trading offers equal opportunity for success, to rich and poor traders alike. CFD trading accounts offer all the flexibility needed to trade the markets for a living. Rich traders are simple minded and not used to facing tough challenges. Those who are less rich, think in terms of extreme competition. They have the necessity to make their money go further, by trading the financial markets more effectively. No amount of training can fully prepare traders for the real thing. When the critical real life trading exam comes only the curious risk-takers have a chance of trading profitably. The forex market is the best equal opportunity place in the financial markets in that regard. It is so large and liquid, that there is no inside information like there can be for an individual stock or commodity. Naive traders having a lot of formal trading education and large funds. Can see their large trading accounts being wiped out in a matter of days. Only few traders, who always recall that the exam always comes first in life and the lesson later… will have early warning suspicions about the market.

Hedging CFD Strategies of Skill

Hedging CFD strategies require extensive skills and some basic numerical analysis skills. That’s what it takes to develop good solid methods to trade forex profitably. Traders used to playing challenging video games and solving riddles, will tend to think outside the box. So as to use some basic formula to assess a hedging strategy in terms of risk and reward. The rich traders on the other hand believe too much in expensive education. And also believe that the lesson comes first in life, and the exam later, which is not true. Certainly not in games of extreme competition, or in the financial markets. And this is why rich traders always believe in an ideal world. By lacking judgmental ability, all these rich forex traders find it difficult to even think about peculiar trading strategies. Where the objectives are variable and not well defined from the start. A hedging strategy is the ultimate test of a trader’s skills, because the strategy is not about buying at A and selling at B. But rather it’s a whole algorithm with many potential stages, conditional decision making and multiple possible objectives. The wise CFD trader implements all this algorithm in their account. The parameters left to their control are entry and exit levels and trade size.

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The Difference between a Casino and a Forex Trading Platform

Forex Trading Platforms Offer Immense Opportunities through Skill Not Luck

Casinos operate various games, most of which offer little chance of success to the player. Forex trading platforms on the other hand offer much more to traders.

How Forex Trading Platforms are Better than Casinos

While it’s true that casinos operate various games. All but a few of these games are games of luck and not skill. It’s only games of sophisticated skills, such as poker and craps, where the player may win consistently. All other casino games offer low probability of success, and the player is doomed, sooner or later to lose all their money. Forex trading platforms are very different to casinos. First of all, casinos are closed circle systems, and are very small, offering small earning potential. The forex market on the other hand is much bigger. So much more that is like comparing a swimming pool to large lake. The forex market is a massive system. And is not really a closed one because it is linked to the real world, global trade and to the entire financial system. Forex brokers facilitate trading in such ways, that even a small retail trader can have full access to the currency markets. Moreover, the small trader stands an equal or higher chance to win, over large size traders. This is because there is no limit as to how much the small retail trader can improve their trading. And because the forex market is so liquid, all their trades can be handled efficiently at almost any time.

Forex Trading Platforms Offer Real Opportunity

Forex trading platforms have enabled many traders to become millionaires, or at least better off financially. Casinos on the other hand produce too few millionaires and successful players. And in reality casinos could never offer the opportunity for success that forex trading platforms offer. It’s all because of the massive difference in liquidity and probability of success. Forex trading strategies are based on skill and proprietary analysis methods. The vast majority of people who frequent casinos do not have equally good skills. And actually attempt to combine social life and fun with making money. And they soon find out that it doesn’t work. And one of the biggest obstacles is noise. Casinos are too noisy and distracting places, where it is impossible even for great minds to focus on specific tasks. Casinos know this, and use it as a tactic to distract successful poker player by offering them free alcoholic drinks. All in an effort to make even these few profitable players lose their focus.

Conflicts of Interests

Casinos inherently operate on a profound conflicts of interests basis, and big consistent winners are simply not welcome. Online Forex trading has its own conflicts of interests here and there, especially in trading between large investment banks. But the market itself is so large, liquid and open, that the small retail trader trading up to $100 per pip, will not encounter any issues. In fact, small retail traders can trade for years and years through reputable CFD brokers without encountering problems. Except for the increased volatility which the market naturally has. But even during those hard volatile times, only day traders may encounter problems. Slow-pace forex traders can get around volatile and high risk times without any problems at all. And because of these proven facts wise forex traders find ways to maintain a probability advantage, always through skill and focus, and not through luck.

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How to Stay Ahead of the Game with CFD Trading

Online CFD trading is taken very seriously today, as more and more wise traders look to improve their risk-reward figures through the hidden benefits of CFDs.

Online CFD Trading Does it Better

Online CFD trading offers much better trading conditions than any other method of trading. And this is because of liquidity and even the very ability to trade, which is sometimes lost in the classic trading instruments. Online CFD training shows new traders the tricks of the trade. And that the real benefits of CFDs are liquidity and linear pricing. Because that’s what profitable trading really boils down to. CFD trading educators are trading veterans coming from all kinds of markets and instruments. They settled with CFDs because they were quick to spot the real benefits of CFDs.

Online CFD Trading is Ideal for Small Retail Traders

Online CFD trading allows you to trade the markets effectively, at unmatched liquidity, and without giving away your strategy for anyone to see. This is not the case with large, multi millionaire traders, who have to trade futures or options. Their trades, bad and good, can be revealed through their exposure to the market. And not only that, but also Futures and options are not linear instruments, and tend to move in all kinds of ways, resulting in poor profitability on the good trades. Options in particular are highly inefficient. Very often, you will find that the underlying stock or currency has to move too much, just for your trade to break even. In many cases, as much as 50% of the market move is required just for the option trade to reach the break-even point. CFD traders do not have this problem, they can catch the entire move, 100%, and profit from it every cent of the way. Wise CFD stock traders however pay attention to option pricing. And they have found that Options can be used as indicators on stocks that are about to move to the upside. Some good CFD trading courses teach their students how to use options as indicators on their stock trades, and how to even time their CFD trades for exiting at the highest high. The principle behind this strategy is that stocks which are about to move to the upside, will have increased premiums on their out of the money call options. Just by comparing options of similarly priced stocks, the wise CFD trader can figure out what the market’s suspicions are. A stock that is about to break out will have an evidently higher premium on its out of the money call option. All the wise CFD trader has to do is go long that stock from their CFD trading account. And they will stand to catch every cent of the stock price movement, resulting in 100% more profit than the average option trade.

And There is More…

Online CFD trading can also be used in advanced hedging strategies. Many veteran traders use CFDs today, both in the intended part of the trade, as well as in the hedging part of the trade. Despite their deceptively simply linear pricing, there are two more parameters the trader can set on CFDs. These are the trade size and market level. Just by adjusting these accordingly, trading risk can be made asymmetrically smaller in relation to reward. And if you still wonder how does CFD trading work? And how can it offer so much more than classic instruments, you only need to recall that CFDs were made for the small size retail trader. And they do the best to serve their interests. And small size is not by any means small, since CFDs offer their unique liquidity for trading up to $100 per pip / market point. And that’s a big limit by a retail trader’s perspective. CFDs bring you the best of the financial markets, while filtering out much of the biggest negatives.