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Top Tips for CFD Trading Systems

CFD trading systems are developed by all kinds of traders. And each one of those tends to be different and unique. What CFDs allow these traders to do, together with their basic perception of the markets is to handle market risk and uncertainty, in a more flexible way. So instead if using strictly defined, traditional stop loss orders, a more flexible risk control approach is used. This approach of flexible risk control, usually includes a hedging trade in the opposite direction, and a large size classic stop loss order. The linear pricing of CFDs allows the trader to be wrong about the market, much more often, and still make money. This is because the hedging trade covers much of the risk involved in a trade. But without necessarily being triggered should the trade go well. For example, the initial trade might be a long trade on EURUSD, with a large, modifiable stop loss order in place. That stop loss order most likely will not be triggered at all. And then, there is a contingent Sell order set in place, to act as the hedging trade on the initial long trade. But this hedging trade will only be triggered if the market falls by a certain number of pips, or breaches a key LSS pivot level for the day. Moreover, the hedging trade can be much larger than the original long trade, and as a result an offset point will be reached for both trades much sooner, should things go wrong. And at that offset point, the two trades together will cancel each other out exactly, the trader can close them both, and also cancel the contingent order. Online CFD brokers offer all this flexibility at your fingertips, and placing these orders becomes second nature for any trader. The good thing about flexibility in handling risk, is that you are able as a trader to take more volatility by increasing the size of the classic stops. And you only need to leave these classic stops in place when more and more uncertainty comes to the market. CFD trading systems can be further refined upon these principles, and in the hands of experienced traders they do work amazingly well!

CFD Trading Systems and Confusion

Markets create confusion every day, it’s a given and proven fact. Only fools should kid themselves by not expecting confusing trading days ahead. Trading CFD for a living requires embracing this risk and intimidating confusion. And the hedging principles, through using greater flexibility, allow you to do just that. You are able to wake up in the morning, not fearing to look where your trades stand. Because you know that confusion and volatility is a given fact, and most likely today’s early move will have fizzled out by tomorrow. So you can close the profitable trade only, and then adjust the trades left, so that big risk will be limited by the stop loss set in place. Once volatility changes again, you can interfere again, and add one more trade or change size on the existing ones. Today’s CFD trading software allows traders to measure the market fast, and accurately for the purpose of placing these trades. The flexibility is amazing, it’s just that most traders are afraid to take the challenge. They see flexibility as more risky and confusing. Maybe it is risky and confusing as seen on its own, but when mixed with the risk and confusion of the market itself, the net result is much more positive. Since these two risky processes actually offset each other. That’s where accurate pricing is needed most, and CFD trading systems offer just that.

Advantages of investing in foreign currency

Investing in foreign currency offers investors and traders of all kinds some unique opportunities. Stock investors are able to hedge part of the risk. While commodity investors and traders use currencies to achieve almost all their objectives. So investing in foreign currency goes a long way, and involves sophisticated methods for hedging risk in other assets. But also for hedging risk in a whole range of classic businesses. To the sophisticated investor, the forex market is a versatile insurance tool. A tool which if used wisely can limit financial losses, in case of unforeseen adverse effects. Airline companies for example are always looking for ways to insure themselves against sudden increases in the price of aviation fuel. This can be achieved through the derivatives markets, to some extend, by trading some instruments on the price of crude oil and jet fuel itself. But if the strategy extends out to currencies, then the whole hedging concept could become much more efficient. Simply put, commodity prices impact some currencies, and currencies themselves can have an impact on these commodities. And that’s why sophisticated investment banks and businesses cannot afford to ignore these patterns. Currency trading strategies allow these investors, as well as independent traders, to either mitigate risk on other investments. Or to make an outright profit on the markets. The forex market is so huge that not only is it perennially fast moving, but also the inherent market risk keeps creating new opportunities every day. Nobody can predict a currency rate 100% accurately, and not for 100% of the time. But there exists the potential to predict a currency rate well enough, so as to make meaningful profits. This means taking relatively small risks, in order to make some good profit.

The Concept of Investing in Foreign Currency for New Traders

Investing in foreign currency helps new traders understand the fundamentals in a major currency move. They want to be traders anyway, not investors. But learning to trade in a solid way, resilient to market noise, starts with investing concepts. Investing can beat market noise and day to day volatility, and help avert many losing trades. That’s why all wise veteran traders, no matter how they trade, always think as investors first. They pay attention to the daily market charts first, and only then focus on the specific day. All this data, charts and the various foreign exchange currency symbols are intimidating to new traders. But once they have developed the mindset of the wise, patient investor, they know where to stand. They know how much they can predict, how much they cannot predict, and how to handle volatility every time. That’s why they all practice currency trading so often, and treat each trading day as unique. Traders have to take routine and extreme discipline out of their trading and treat each day as unique. This helps think as an investor. And investors always look for that unique set of circumstances. This process includes geopolitics and technology not just economics and technical analysis.

How to Learn Online CFD Analysis

Online CFD trading helps traders of all kinds come up with new ideas all the time. This is because CFDs themselves are inherently innovative products, which broke the dogma of the trading world. In previous decades, investors knew only about stock trading, stock trading on margin and later about futures. The forex market was at a very primitive stage, where only investment bankers had access, and even fewer could figure out. And while the market risk is always there, evolution has at least made it possible for wise people to become top traders. Higher education is not essential, understanding of economics is not essential either. Moreover there is no universal truth in economic theory, and no one single economic model. It is possible for the average person, who is well motivated, to figure out real trading strategies and methods for these markets. By including CFDs in a trading strategy, the trader is now able to hedge risk in ways that are almost impossible to verbally describe, but are possible to describe through spreadsheet analysis and basic algebra. Online CFD trading allows to put these ideas to the test, and if successful, the trader stands to literally make millions over few months or years! This is because opportunity always exists in some places, but either risk or too much obscurity prevent the individual from exploiting that opportunity. And it gets complicated, because as one attempts to measure that risk and hedge against it, a minor oversight or miscalculation can mess up the entire formula, and yield the wrong number. The truth is that many events in the financial markets today carry risk, which can be almost completely mitigated through the right hedging strategy. And that hedging strategy can be implemented through CFDs trading. Online CFD brokers offer more than enough in terms of service and trading tools, that a trader will ever need in actual trading. The other part of the work involves simulation, modeling of risk in a spreadsheet, and a good imagination, which many young traders seem to have.

Online CFD Analysis for Hedging Trades

Online CFD trading for hedging purposes requires analysis on volatility and other metrics. But volatility is the number one field of research. CFDs themselves are linear and will do the job of hedging risk, easy to figure out and to implement. You simply trade from A to B, X number of points, and a CFD contract will provide the insurance needed. But together with market volatility, traders can learn when to execute that hedging trade, and at what trade size. Traders can start working on these two variables alone, volatility and trade size. And various attractive ideas will reveal themselves. Volatility is always a measure of market risk, but it works differently from market to market. So that volatility of the stock market goes up as stocks fall. But volatility of oil stocks goes down as crude oil falls. It’s because volatility measures fear, and fear hints that stocks risk going down on any day. And crude oil risks going to $200 a barrel during almost any week or month. Volatility creates asymmetries, ie stocks tend to fall much faster than they rise. As fear is always more pressing than greed. Using the right analysis approach, a good CFD trading software, and by being motivated, traders can excel in today’s markets. The opportunities will always exist, apparent risk and difference of opinion, as well as overall obscurity will always prevent the market from exploiting these opportunities. Trading online made easy through the use of these concepts and CFDs, is possible for those who are already even partially successful. It is certainly not easy for negative thinkers and people lacking original ideas. But many retail traders are original thinkers by their nature.

How Trading CFD Online Benefits Investors

Trading CFD online is often presented as a hot opportunity, because it offers affordable leverage. So that small account traders can trade better and with greater flexibility. But leverage alone is not something that will offer you an edge over other traders. In reality, CFDs are much better than other leveraged instruments because they are linear in their pricing. And also because they offer strong one way liquidity. CFD stock traders and investors for example are able to short stocks even when there are short selling restrictions in place. A tremendous advantage over classic stock traders. And this unique provision of liquidity goes a long way, as CFD traders always get a better price, with every trade. In theory, this liquidity is good up to a certain point. FX traders for example using CFDs can enjoy this unique liquidity and enhanced profitability, for trading up to $100 per pip. But $100 per pip is a huge limit, and covers the needs of 99% of retail traders. Online CFD brokers facilitate trading CFD online in the most reliable way possible to this day. Entire CFD trading systems and strategies are focused on this liquidity edge, and can not be implemented using futures or the spot markets themselves. Make no mistake, liquidity is critically important! Moreover, as traders learn to trade better and more selectively, they realize how important trading efficiency is. And good efficiency would still be worth it, even if CFD brokers charged the highest dealing costs and commissions. Retail traders would still be far better off with these brokers than they would ever be with any other type of broker. Futures brokers are the worst solution for retail traders. While futures offer trading on a large, industrial scale, they are only suitable for investment banks. And these investment banks suffer as a result, because their large trading cannot get the best possible market price. And moreover pricing is not linear. That’s the price you pay when you are a supersized trader like investment banks are. And as you can probably guess, these problems of the non-CFD traders become more and more serious as the frequency of trading increases. So retail CFD traders are at a significant advantage — they have an edge no one else has. If the retail trader is bad and they lose money, they will blame the failure on all kinds of factors. But CFDs are not what makes them lose. It’s their bad strategy. On the other hand, retail traders who actually win consistently, having tried everything from spread betting to futures, and finally CFDs, never switch back to these instruments, and stay with CFDs.

Trading CFD Online is Almost Magic

Trading CFD online is so productive in the hands of wise traders, that they never look back. The edge of linear pricing and enhanced liquidity becomes evident in their trading accounts, as trades are handled better, faster, and overall profitability is increased. So is trading online made easy today through the advent of CFDs? Certainly not! CFDs are not about making trading any easier, it’s always down to the individual retail trader to develop sharp trading skills. And CFDs are not a substitute for trading skills! What CFD trading does is enhance the profitability of already profitable traders. But it does it so well, that in some cases the difference made by the superiority of CFD instruments is beyond comparison. CFDs enhance profitability for the retail trader. In ways that primitive instruments could never do.

Why Your CFD Trading System Platform Matters

Having a good CFD trading system is about selectivity, and the ability to dig deeper and deeper in every trade and set of market circumstances. And while the financial industry is based on statistics and probability, their formulas are based on risk measurement in a very general way. Just like car insurance firms, who adjust insurance premiums from driver to driver, so as to cover their own risk accordingly. This kind of statistics is very broad based, is diversification-based and not necessarily good for retail traders. The retail trader needs to avoid excessive asset diversification, and focus more on the single trade. Car insurance firms have no way of knowing who drinks and drives, who drives carelessly etc, so they use primitive statistical facts to charge higher premiums to drivers who fit these high risk profiles. If these firms had very specific information on risky drivers, they could avoid them altogether. Drivers who may cause millions of dollars of damage, in a single accident. Well guess what, CFD traders can go this deep in many single trades, and identify big losers and possible winners. So there is no need for much diversification. Moreover, if hedging strategies are used, through CFDs, there might not be need for diversification almost at all. It’s one smart trade, on one market, and that’s it! The probabilities can still be very good. Online cfd brokers allow this kind of sophisticated trading, and wise traders take full advantage. Any good CFD trading system can beat the odds, just as long as the trader is able to identify the uniqueness of each trade. Diversification and high frequency trading, based on large sample statistics can still work — it’s not that the theory is flawed. But the profitability is nowhere near as good as that of the wise CFD trader who makes unique trades, and no two trades are exactly alike. Online CFD trading has come a long way. Most CFD traders actually are not fully aware of the hidden benefits of CFDs. And these have to do with hedging a single trade, any trade, in a very good way. So that the trader doesn’t have to worry about diversification, and statistics of large samples. Rather they have to worry about trade-specific parameters, such as volatility, trade size and timing. Probability theory applies, but in a different way.

The Best CFD Trading System

Evidence evaluated in actual CFD trading and hybrid systems utilizing CFDs, does suggest that a CFD trading system can be made to be far superior to any non CFD based system. Rather, CFDs allow traders to hedge risk on a single trade, in a very efficient way. Without using advanced CFD trading software, or premium trading tools such as Expert Advisors and the like. Simply, by focusing on the uniqueness of the day, of the week, and the trade itself, traders are able to create asymmetrically low-risk / high-reward trade possibilities. These strategies do exist, and they are more strategies than actual systems in that they require a lot of personal judgment. And therefore they cannot be emulated, cannot be easily taught, and are impossible to prepackage and sell. But any wise-enough curious CFD trader will figure them out to some extent.

Simple Forex Trading Strategies that Work

The idea of developing solid forex trading strategies is based on the necessity of getting around market noise and false trends with a strategy or rather family of forex trading strategies. One such strategy is based on daily trend analysis through swing trading theory. This analysis identifies the underlying daily trend, and makes the assumption that news cannot change that daily trend. The forex trader then looks for days where the market deviates away from its established trend, that is it trades in the counter direction. And the assumption there is that the market will get back to its previous trend. Entire currency trading strategies are based on this theory, and the assumptions are very safe to make. Things can go wrong, but not without any prior hint. The daily chart carries a lot of weight, and many warning signals. Anything from divergence signals to LSS pivot levels, can act as a warning signal. It is extremely unlikely that the market will make a sharp move, out of the blue, without any signals in place. Most traders miss these signals because there is too much ambiguity and there are many conflicting ones as well. A forex trading business opportunity could be based on any such strategy, with focus on the daily chart. Meticulous planning is required, but the goals and objectives don’t have to be rigorously defined. Traders need to be careful with assessing probability, volatility, the impact of volatility, and various other parameters. In any case, the daily chart is the most useful chart, because the time frame based on the daily session, is the most accurate one. Swing point analysis provides all the basic information about the trend. And when in conflict with moving averages, traders need to focus on the swing point theory. Then, there is chart pattern analysis and day to day analysis which also powerful. These patterns carry more weight than off-chart indicators.

Forex Trading Strategies of the Wise Traders

Wise veteran traders do use methods which rely on creative thinking and are not restricted to one style or another. These forex trading strategies may borrow one thing from day trading, another from swing trading, and another from investing. You might think that investing is not relevant to day trading, but you’d be wrong. The mindset of the investor is necessary in order to understand week-to-week fundamental trends in a currency pair. Things such as interest rates, inflation reports, and the state of the economy of a country are medium-to-long-term factors. And relevant at least once every three months. These factors can have catalytic impact on a single trading week. And they can determine whether the currency in question will for example recover from a sharp decline or not. So even though day trading forex live review reports and theories fail to mention long term factors, these factors are important. Swing trading theory attempts to define solid support and resistance levels. That is what many traders need to know. But the answer is often a range of prices, rather than a couple of thin pivot numbers. The market can sometimes breach a pivot level and yet not reverse. That’s what a false breakout move is.