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Online CFD Trading – Not For Publication

Online Contracts for Difference or CFD trading allows you to make profits due to changes in the prices of underlying financial instruments without actually owning them. This relatively new type of trading is gaining popularity because of the many advantages it provides.

The most profound advantage of online CFD Trading is that because you are only trading the difference between the purchase and sale (or sale and purchase) prices of an asset, you incur none of the brokerage fees associated with such a transaction – no “round-trip” commissions; only the margin spreads. The market trader enters into a contract with a CFD at a specific price, and the difference between that price and the price that it is closed at is settled in cash. (Note: A small fee is associated with holding positions over 24 hours, so CFDs are not appropriate for all longer-term investment strategies)

Discovering What Is online CFD Trading

Below we list some of the significant advantages of CFD trading.

1. Leverage plus margin

Leverage is the mechanism whereby your CFD margin deposit controls an asset of many times greater value, offering a magnified trading impact and accelerated return. The most significant advantage of online CFD trading is the unrivalled margin available in today’s platforms, with leverage of up to 400 to 1 (in forex).

Thus, a very small principal can control a significant trading amount, magnifying gains (and losses!). The implications of your decisions take on exponential importance. With this magnification ability comes a responsibility for better preparation and more professional execution. With this leverage ability across the entire range of asset classes, you can benefit from trading the entire set of asset classes with minimum committed capital.

2. Liquidity

CFD trading is a truly global enterprise. Trade initiation is possible if an official exchange is open for business somewhere on the globe. With forex, major commodities, and stock indices trading nearly 22–24/5, so are CFDs. And for commodities and shares listed only on US or European markets, trading hours are no less than in the underlying exchange. Fixed margins and best execution policies minimize unexpected “spikes”, even in fast moving markets. With CFDs, what-you-see is almost always what-you-get.

3. Tax and cost efficiency

Again, because CFDs are only agreements to compensate for price movements and not transactions involving asset ownership, their cost efficiency and style of taxation are also more advantageous. Levies associated with specific asset classes, like stamp taxes on shares are not imposed. The general exemption because no physical asset changes ownership can beneficially affect the relative tax and regulatory burdens as well.

As discussed above, the absence of a commission means that transaction costs are minimized. Furthermore, fixed costs are largely eliminated.

Similarly, the expensive costs and delays of a physical delivery of the shares, the registration, and any holding/safe custody charges that come with having a broker are eliminated, which saves you time and money.

4. Facility of automated orders and alerts

Today’s advanced CFD trading platforms offer a uniform interface for trading in all underlying assets. Additionally sophisticated alarms and trade prompts and executions ease your formulation and execution of standing orders to minimize losses and maximize profits.

5. Convenience of placing orders

A very important benefit of online CFD trading is that you can place your orders on multiple platforms and environments with one interface. Industry-leading companies offer 24/5 assistance and advance mobile-friendly environments. Seamlessly monitor your portfolio on smartphones, tablets and desktop PCs, depending on where you are. Trade anytime, anywhere.

6. Breadth of Offerings

In addition to the seamlessness of the interface and the general absence of commissions, the ability to trade a thousand or more financial instruments enhances the functionality of online CFD trading to the extent that they represent an optimal platform for a variety of hedging and risk management positions. For both traders with positions in any number of marketplaces and businessmen with exposure to underlying asset price fluctuation, having a single user-friendly multi-platform interface with position details reduces risk and overhead.

Now you can see the benefits of online CFD trading and why this type of trading is enjoying increasing popularity, particularly among those with modest funds available for trading.

CFD Online Trading Platform Specifics

While CFDs were initially publicly traded negotiable instruments on stock exchanges, their business model rapidly evolved and migrated into proprietary platforms wherein and whereby volume grew exponentially. Integral to this evolution was the explosion in computing power and the internet such that each current CFD marketplace is a closed platform backed by private capital. While national and supra-national financial regulators impose a veneer of respectability and oversight to the various operations, the business license threshold is minimal. Traders are thus required to perform their own due diligence in platform evaluation.

Evaluatory criteria include those both specific to CFDs and those more general related to trading environments. Apart from registration and any infraction information available from the regulatory authorities, enquire as to

Bid / Ask spread size and variability —The greater your trading velocity, the more important this variable will be to your performance. Often in online CFD trading, this variable is negotiable or a function of volume. Particularly here, clarify with brokers or sales representatives as to what special treatments are available and the criteria required to obtain them.
Simulation account — Practice, practice, practice. Your online CFD trading platform should offer an unlimited environment in which you can try out your trading ideas and regimes and you should avail yourself of it. Contemporary psychology posits that 10,000 repetitions are required to master an autonomous action and while it can be readily agreed that playing piano and profitably “playing” markets are dissimilar skill sets, both require a degree of mental discipline and competence and the ability to learn from mistakes. Do not underestimate the demands of this element of preparation
Customer Service and Responsiveness — After a thorough vetting of the prospective online CFD trading vendor and initial trading initiatives, both simulated and real, initiate and evaluate the firm’s customer service, across the entire range. Only after you have satisfied your expectations
- Ensure that order execution suffers minimal distortion. While total liquidity and instant position realization is not a reasonable expectation for a beginning retail trader, lags and price variance should be reasonable.
- Attempt to withdraw funds. Regulatory anti-money-laundering laws have rendered the withdrawal process into a more stringent and drawn out process, but once you have submitted the correct documents, your second and subsequent requests should be routine prompt affairs.
- Ask difficult questions and make demands. Confirm that “24/5” availability is truly the case. Ensure that promised responsiveness extends to all communication channels: for example, phone, email, website, instant messaging
Quality of Ancillary Assistance — With the information technology explosion and internet revolution has come the ability to calculate and present endless analyses of data, from streaming news feeds to market commentary, charting packages, and alerts of varying kinds. Your platform should offer a wealth of such tools and the ability to package, deliver and format them as per any individual preference.
Instrument leverage — The multiple of your margin capital. This magnification factor is actually less important than other platform characteristics because new traders in particular over-leverage their capital. Just as in the larger business world, most business fail, with the single largest contributing factor under-capitalization; Most new traders fail, with the single largest cause being over-leveraged positions. As a beginning trader, no single trade should represent more than 2% of your “risk capital” (defined as monies which can be lost in their entirety) and ultimately this percentage can be increased to five percent.

The Forex Trading Platform Online Traders Prefer

The Forex Trading Platform Online You Should Use

The typical forex trading platform online traders prefer, is always one which offers sophisticated trading tools. All for the purpose of catching more trades.

The Forex Trading Platform Online Traders Prefer is the Perfect Trading Terminal

Traders usually have more than one strategy, and trade more than one market. Though they all develop special skills around one set of markets, or trading hours. Online trading is a must in today’s fast moving financial markets. The forex trading platform online traders choose to use, is one which facilitates all their specialized trading needs. Typically these needs include the ability for placing contingent orders with detailed triggering criteria, and catching opportunities while they are away from their computers. This kind of automation is essential for implementing many forex trading strategies today. The forex trading platform online traders use, has to also provide embedded calculator tools, for performing fast and accurate calculations. This functionality is critical even to swing traders and CFD stock traders, because they can play around with various numerical inputs, and work out insightful and accurate results. The old school handheld calculator cannot match the accuracy and speed of spreadsheet-like embedded calculators, because data is entered in a sequence, and any mistakes are carried through. The good CFD trading platforms especially, offer all this and even more. The wise traders of today’s markets are more like number and chart analysts, rather than simple, passive financial news receivers. Even if one trades on the daily news, without numerical analysis and price targets, they will have no clue where and how the probabilities will dictate the trend on that day.

One Kind of Forex Trading Platform Online Traders Don’t Like

There is one type of forex trading platform online traders don’t like much, and that’s the kind of bad innovation. Any platforms that evolve too fast, without being compatible with previous versions, in terms of user interface, fail to win traders. It is the kind of failed innovation we saw with Windows 8, which is hard for previous version users to become accustom to, if not annoying to use. Such extreme changes in a trading platform are not welcome, as traders are used to a certain layout on their trading platform. And even new traders, who just started to learn forex trading, are not keen on dramatic changes on the trading platforms and in their software. Traders develop trading skills, and in the process of doing so, they become accustomed to pressing certain buttons and seeing certain things, in fixed places on the trading terminal screen. If the trading platform in question appears to be too radical, and too space-age like, it does create user compatibility problems. But in reality, not many such platforms exist, all good brokers avoid extreme changes and pay attention to customer comfort. One area of moderate evolution is on forex, and the ability for the trader to see exactly how much money they trade per pip. Instead of using the old format of Lots, which to many new traders may be confusing. This change is good for new traders who don’t understand the pricing of the Pip and Lot size, not a mad step forward, but somewhat unnecessary for most forex traders.

How Do Global Events Affect Online CFD Trading

Online CFD trading in Today’s Global Financial Markets

Globalization has improved economies and living standards around the world. While small investors look at online CFD trading as the perfect opportunity tool.

Online CFD Trading Wins over Classic Investing

Classic investment methods are proving to be more and more inefficient and hard to afford in today’s markets. This is because the average retail trader has to take into account a market’s volatility and overall risks. Online CFD trading offers all the good things and earning potential of classic trading and investing. But without many of the bad aspects that classic investing has. Many old fashioned investors and traders still may wonder, how does CFD trading work? But even them are quick to learn and adapt. Global events create risks and opportunities on a weekly basis, in all markets. And even though the trading industry and many CFD trading courses push for day trading. The real opportunity seems to lie somewhere between week to week trading and day partial day trading. This is because the week is a time period which allows for good time flexibility against unforeseen events. While also allowing traders to make a profit without having to wait too long.

Online CFD Trading Gets the Attention of Stock Traders

Online CFD trading is constantly winning more and more fans among classic stock traders. This is because of the benefits of CFDs, which are quite unique and often overlooked. Stock traders and investors, all need ways to limit their downside risk in the near term. And hedging a stock trade is not affordable or as straightforward through instruments other than CFDs. Even day traders, trading stocks using advanced methods and level II quotes. Have found that CFDs help get the job done both fast, and at very low dealing cost. Online CFD trading has the potential to boost profitability in many different trading systems. There is no need for extensive online CFD training on how to use CFDs. But ti helps to know the real benefits.

The Global Stock Trader

Globalization offers good opportunities every week, especially in commodity related stocks. And also in stocks where level II information can be cross-confirmed against local, stock-specific factors. So that the trader is able to figure out why the stock in question may rise $5 this month, without really being bullish. And why it may also rise $5 at another time, where the circumstances impacting the underlying company are actually very positive. And in which case the stock will continue to rally. So it’s important to know the story behind the numbers and who is really buying or selling a stock. Even geopolitics is important in this kind of analysis.

Tips For Trading Success on Forex Trading Platforms

What is Missing in Most Forex Trading Platforms

Forex trading platforms used today are all good, for most tasks a trader may have to do. There are however trades where a simple price chart will not suffice.

Forex Trading Platforms and Competitive Trading

Forex trading platforms and even premium market charting packages are designed around clients’ demands. And even though they cover a wide spectrum of indicators and tools. The wise forex trader may need to resort to yet different types of charts from time to time. Sometimes patterns such as price gaps are visible on some charts, but not on others. And sometimes candlestick analysis may yield different results because different charts show slightly different candle bars. And in extreme cases the trader has to resort to point and figure charts or totally different charts. So as to be able to see beyond market noise and confusion. Forex brokers do their best to meet the demands of their clients on charting tools. And they facilitate online forex trading extremely well. Nonetheless, no amount of prepackaged tools and indicators is ever enough when the markets become really confusing and intimidating. And the wise forex trader has to look even further out for clues on market direction. Forex trading platforms help get the job done, but cannot provide all the tools a trader may possibly need. Even premium charting software fails to go this far.

Forex Trading Platforms and Hedging

The wise forex trader often needs to hedge an open losing trade. This is usually a trade which the trader believes will turn around. And the trading platform provides all the tools necessary, such as contingent orders, to manage trade risk quite well. Forex trading strategies focused on extensive risk control through hedging are clever strategies. The main objective is to expect losing trades, always. And to invoke plan B, specifically for that scenario. The wise forex trader identifies strengths and weaknesses on the charts, and prepares to handle both market directions. Market volatility can be thought of as a third direction. Where no lasting trend will ever develop. And volatility itself is more complex than it appears. Traders who understand volatility and know the underlying daily trends of the markets, make the most money. The forex industry is focused too much on day trading. And yet it is a mistake to be a exclusively a day trader. The forex market has all kinds of participants, and the most influential ones are not exclusive day traders. So it’s a good idea to use forex trading platforms for more than just day trading, the tools are available in them anyway.

Pay Attention to the Principle of Probability

The basic idea of probability in forex trading is all about imposing time limits on trades. Trading platforms have not yet evolved to this level, but may do so in the future. The idea is that if a trade fails to show profit of at least an amount X or more, at Y number of hours after it has been opened, then the trade will be closed. This timing has to be adjusted around the probability that a trade which takes too long to become profitable. It naturally starts to become very likely that it will turn into a loser. And it is a concept that many floor traders and veteran forex traders have used over the years. And it does work, because it helps traders avoid large losers while still being at the break-even point.

Live CFD Trading Signals Charts and Analysis

Information About Live CFD Trading Signals

Wise day traders use live CFD trading signals charts and methods, to trade on. There is balance between complexity and simplicity, so that trading makes sense.

Making Sense of Live CFD Trading Signals Live CFD trading signals are confusing and they hardly ever make any logic sense. Unlike investing or swing trading. Day trading is fast, and most trading signals are very simple in nature. Trading CFD profitably is quite difficult, but also very rewarding. Since profitability of even such simple, almost mechanically inferred signals is very high. This is especially true in stock trading through CFDs, when the strategy involves the use of level II stock information. This information is provided by the market, and though not perfect, it does match the needs to day trading. Online CFD brokers can facilitate the actual trading 100%. Even for the most demanding stock day trader. Live CFD trading signals can be inferred out of these level II quotes very fast. And profitability, in the hands of a wise, bold day trader can be extremely high, in the $100s per hour. Compared to the forex market one could make the case that stock day trading on level II offers an edge that forex traders don’t really have. So if you are thinking about day trading stocks, don’t even touch the market before you have access to level II information. As well as a basic understanding of the patterns involved. And as you can probably guess, things can get complicated. But some basic signals are really easy to spot. CFDs make the task easier and better, through their enhanced liquidity. That is something direct access traders don’t have, even to this day. And in fact liquidity has dried up in recent years due to regulatory limitations on the stock exchanges. So the way to go now is combining CFDs and level II quotes. That is the killer combination which allows traders to really make millions.

Live CFD Trading Signals can Be Deceptive

Day trading signals are weird and confusing. Live CFD trading signals based on actual market signals are just as confusing, though somewhat safer to trade. The truth is that you simply don’t know why a stock is going down in a given moment. And the signal may either be a very good buy signal, or a huge sell signal in the making. So making sense of the information is critical, even more so with level II. The good news is that the trader can do some company-specific digging and assess the weekly movement. A good, solid stock is unlikely to produce a massive sell signal out of the blue. Wise CFD stock traders can take things further by carefully analyzing stock charts. Chart analysis doesn’t have to be too complicated. But analysis on level II information has to be complicated and to have certain depth. Because opposite signals can look deceptively similar. Other than that, trading CFD contracts on stocks, profitably, is indeed within many traders’ reach.

Stock Trading is Nice

Forex and stocks are significantly different. But when it comes to fast day trading, stocks may be a better choice. A good CFD trading guide on the other hand will focus on trading commodities or stocks or currencies, the slow way. Because slow trading has its own different advantages. As well as its own unique predictive power. When it comes to choosing stocks or currencies, it’s up to you to decide. But based on some facts alone, fast day trading in today’s markets better favors stock trading. If you do go for forex day trading anyway, then you need to focus on time zone analysis.This makes forex day trading possible, though the trades are still not as fast as in the case of stock day trading.

Trading CFD for Dummies and Beginner Traders

It’s not really as simple as trading CFD for dummies. Rather it’s about trading CFD for dummies who want to explore the markets deeper. These new traders want to match and even outperform the best traders out there. And there is no reason not to be ambitious, because trading is about achievement. Traders need to be careful and choose how they will gain their first education. As there are many misleading information sources online, as well as courses that may be at least in part wrong. Ideally, one wants to learn from a trader who has used CFDs themselves, in actual financial trading. Especially someone who has used CFDs for the purpose of hedging some stock trade. Or speculating on the price trend of some commodity. These trades or investments, are very interesting, and CFDs come in handy, as a way to enhance them and make them much better. CFD trading systems may be about strict directional trading, or about both directional trading and hedging. The benefits of CFDs are found in every trade. Other CFD trading systems are used in recent years by stock option traders. Because on the average stock option trade the stock has to make a huge move just for the option trade to break even. And as a result, many stock option traders could not really profit from small and average stock price movements. At least not in an affordable way. So retail stock option traders, the world’s most sophisticated traders, started employing CFDs on the directional parts of their trades. As a result, they are now able to profit from stock price movements 100%, no matter how small these are. So anybody may use CFDs for the first time, there is nothing to be shy or hesitant about.

Trading CFD For Dummies And Beginner Traders — CFDs are not only very liquid at all times, resutling in best possible closing price. They are also ultra-linear in their pricing, allowing you to profit right from the beginning of the market’s price movement. Even wise stock option traders now use CFDs in the directional part of their trades, because it makes a huge difference to their bottom line. Most of the time a stock only moves by a small percentage, CFDs capture all the movement, to the last cent.

Trading CFD for Dummies where Traders Learn from Scratch

Trading CFD for dummies typically involves teaching all the basics of CFD trading. But traders still may have to learn more about the liquidity benefits of CFDs, which are unique to CFDs! New traders can sue a demo account, or a small live CFD account to see the real thing in action. Things can get very interesting and exciting when one trades a strategy which combines classic and new ideas. Such as trading gold and AUSUSD, or crude oil and USDCAD at the same time. Because traders get to see and explore how one market impacts another, and how forex relates to commodities and commodity stocks. You can be a specialist. But it makes no sense to define yourself as a forex or commodity trader. The focus has to be on the single underlying market, for example crude oil. This market spans over all 3 major markets, stocks, commodities and forex. When new traders familiarize themselves with their CFD trading software, a comfort zone is established. And using CFDs becomes second nature, for many different kinds of trades.

There is Nothing Like the First Profitable Month!

A profit is always nice, but single profitable trades may not mean much. As they are usually followed by a streak of losing trades. But when new traders achieve their first profitable month, making for example $1,000 in profits. Their confidence is boosted and CFD trading is taken more seriously. They know that the idea of trading online made easy is not really true, they know that no profits will come to them without effort. But getting some perspective, and respecting even small monthly success. Helps them think like dedicated professionals even in this early stage.

The feeling of success after a huge commitment and a long pursuit, is very exciting. That’s why every wisely made profitable trade is a vindication of your efforts. Trading CFD for dummies, basic training, and all these fundamentals are not just for boosting your knowledge. But also for boosting your confidence as a new trader. CFD trading strategies for beginners are actually simple and crude. Traders are expected to bring in their own creativity and to modify these strategies and methods. So in effect, this whole entry level training. When conducted by a passionate educator, poses a motivating challenge to the students. And this is priceless, because it helps new traders develop critical thinking and to find solutions to problems. That’s why CFD trading for dummies may even contain some principles that you may some day stop using altogether. If your own principles and ideas make basic training redundant down the road, that’s great. It means that you will have understood the challenge and have dealt with it effectively. Profitable trading is exciting, still somewhat stressful but exciting. Because it confirms that your thinking process was right. And that’s a great feeling. There’s no need to try to emulate other people’s trades or use trade-copying services. Solid trading success only comes from understanding markets and volatility. And with you in full control of your trades. In fact, people who expect to make money copying other traders’ trades are weak minded and unable to see coming failures and losses. So the way to go, is to trade on your own 100%.