Key to Successful Trading Online Includes Perserverance and Judgement

To most people, trading online seems to be intimidating and difficult. And rightly so, as the skills required to undertake such a task are very hard to learn.

Trading Online is Difficult But Also Highly Rewarding. It’s All about Boldness and Perseverance

Traders are people who either trade for hedging purposes, or simply speculate on the future price of a market. Sometimes they are simply called speculators implying that they expect this or that market to move in a certain direction. These traders might be trading forex, or engage in commodity trading through online cfd Trading. While others prefer trading individual stocks. Regardless of what they choose to trade, they are all risk takers, people willing to take risks. The market offers the opportunity to make money, it offers this to all the participants. This opportunity exists because the market is not efficient, which means that one person has more information than the rest of the participants. Or simply, that one person might have more specialized knowledge, and deeper understanding of one market or asset. Trading online is all about boldness, courage and perseverance. And it separates traders apart, as a kind of tough test which very few can actually pass. It is a lot like a fierce competition, where participants have to out-think their opponent. But it is a real and a very serious competition, one which determines so many things in every day life. As every day life is related directly to the financial markets. Commodity prices, consumer good prices and people’s pension fund performance are only a few examples of the impact of the financial markets.

How Speculators Differ

Speculators are always looking for an edge, an advantage over the other participants. As opposed to hedging traders who sometimes trade in a directionless way, simply following momentum, while trying to cover risk when things go wrong. Commodity speculators use efficient cfd trading platforms in order to trade fast and accurately. They are acting bold, in most confidence and fast. This is achieved through some studying of the markets, and some logical reasoning. Trading smartly online allows them to make money from their judgement on the markets. The risk and the fear that exist at all times in the financial markets repel 1000s of other traders from making the exact same trades, hence profit margins remain available, for hours or even days at a time. But when a trade is too obvious, and many traders know about it, the profit margin evaporates fast, and the profits are shared by many more people. Trading online for profit is actually possible, but the skills needed to do that are very heard to learn. It is almost impossible to read about profitable trading and become a good trader all through reading some books. Because there’s always that boldness factor which no book can teach.

What is Forex Trading Most Known for

What is forex trading in the minds of people… it’s an activity where traders make or lose millions in highly risky conditions where no one else fits.

The forex market is characterized by a community of independent traders staking their personal capital on speculative positions with a sufficient chance success that a measurable percentage actually profit from their endeavors. The allure of online trading has imbued it with a rarefied mystique, replete with gnomes and quant wizards who generate market movement from behind silk screens a-la Wizard of Oz. But this is not so, the market is actually made up of ordinary businesses, small and large, as well as millions of ordinary people. They are all forex traders more or less. Admittedly, some players have access to greater financial and computing resources, giving them something of an advantage. In some cases it takes meticulous planning and strategy to be able to profit from the currency market. And despite all the planning, the risks are equal for everyone.

Currency Trading is Essential and Good

The activity of trading has thousands of years of precedence, even if its humble origins were anchored in precious-metal-based lucre. National currencies were in fact backed by the value of reserved gold until around WWII but this soon created a problem. As the world started to recover from WWII economists in countries such as England came to the conclusion that the gold standard posed a problem. It simply made exports too expensive and manufacturers of exportable goods were unable to compete in the open market. That’s why the gold standard was abandoned and a free floating currency exchange rate mechanism was put in place. It evolved into what is now known as the forex exchange and functions relatively well in comparison with the previous fixed-rate gold regime.  The evolution of forex trading in the modern era has progressed from analog voice confirmation and execution to digital virtual marketplaces, dramatically expanding the set of traders in the process.

What is forex trading less famous for is the Carry trade. On pairs such as AUDJPY, the difference in interest rates was massive for many years. Being as high as 4% on AUD, and zero on JPY. Anyone who bought AUD and sold JPY, through a leveraged account, and knew how to hedge the price fluctuation risk through another currency, made effortless millions, literally! Because they got paid 4%, or close to 4% on one currency but had to pay zero on the other currency.

Forex Trading Today

Deep down, today’s market poses the same levels risks as any other business endeavour does. There’s nothing obscured or super secret about the currency market, at least no more than there is in classic trading, antiques dealing or real estate. Those in the know always profit in all these markets. The “forex market” is a concept implemented both in many different venues and platforms, both real and virtual. Traders, acting on forex signals engage in the entire range of commercial activity, from hedging physical position offsets to outright speculation. One example of a non-speculative forex transaction is initiation of a carry trade, in which money is borrowed in a lower interest currency and then lent/invested in a higher interest currency for better returns and the forex transaction sterilizes the risk to the initiator.

Opportunity through the Volatility of Forex News

Forex news crates volatility, the kind of volatility that causes huge price swings, and offers the highest probability that price will revisit target price level again, in the same day. In fact some times, some key price levels are swept by price several times over. Thereby offering tremendous opportunity to day traders who stand to make several 100s of pips, out of a day where the market seems to have moved around 200 pips.

The Key to Trading Volatile Markets

Day trading forex is not about investing in foreign currency, rather is about establishing a price level, as a base and then executing small trades in both directions around that base. News is usually only good for directionless trading. Rare is the case where a solid breakout move will be triggered by news and will be sustained in the following days. The probability strongly favours directionless trading on news days, and it is next to impossible to make sense of the news. This is because news seems to be kind of a binary bet, but is actually much worse than that. Some traders believe that the probability of figuring out the impact of news such as an economic report number, is even less than 20%. And not the seemingly 50%. Foreign currency trading therefore takes the form of directionless trading on such days and the best thing investors can do is look for entry points. These directional investors can still pick these extreme lows or highs created during the news day and wait for the market to vindicate them in the coming days.

Day traders and investors have a common time frame of focus, that is the 30 minute chart. Which one can use for both day trading and longer term trading. As the 30 minute chart is powerful but still relevant to a specific day’s range and potential daily market direction.

Why Traders Prefer High Frequency Trading

certainly not all of them do, but it is far more exciting to have a news day to trade, where price and uncertainty will create opportunity, rather than have quiet, dull days. And markets do in fact tend to move slowly prior to the release of news, sometimes they tend not to move at all on the trading day just before the news announcement day. Forex news offers excitement to day traders, and it helps make things more interesting through the way that the market absorbs the new data. Many times the market ends up moving in the opposite direction for the day, than that originally expected. News trading is simply the basis for intense, high frequency trading, and all traders find it interesting. After all it is volatility that creates opportunity, and most daily sessions offer limited volatility, and sometimes no great predictability to the average day trader. As markets never follow exactly predictable patterns, and what worked last week will not work this week. By the same token, this uncertainty and non predictability makes markets a real challenge, a kind of riddle which everyone wants to crack.

The Benefits of CFD Trading in the Hands of Nimble Traders

CFD trading is perhaps one of the most efficient ways for traders to trade the financial markets. It is also definitely the best way for fast, nimble traders seeking leverage and to abstract themselves from the markets. CFD trading offers unique flexibility and freedom when it comes to short selling stocks when short selling restrictions or lack of trading volume that may cause all kinds of inaccessibility to the market. More often, however, traders find themselves in a situation where poor liquidity and subsequent bad filling prices eat into their profits with each trade. This situation is when CFD trading really does better. The liquidity issue alone is so critical at times, that CFD trading in the hands of a good trader may far exceed the profitability of any other instrument. And the higher the frequency of trading the more profound the effects of bad or good liquidity are on one’s profits. CFD trading is the low cost, efficient method, to trade markets at any frequency and with a lot of confidence.

Today’s Markets Facilitate CFD Trading Well

Today’s markets are big and more efficient, but CFD trading takes things to a whole new and better level. For all traders trading up to some reasonable limit, a limit which is still too high to reach for most of us, and which all good CFD exchanges provide through their advanced CFD trading platforms. Even though most people are obsessed with the high leverage in CFD trading, it is actually the better filling price on every trade, during bad market conditions that averts further risk and makes more money. Nimble traders utilize flexible CFD trading plans to implement in the best response to any given market situation. CFD trading facilitated through good brokers today is ideal for trading commodities, stocks, currencies and more; Especially commodities and related commodity currencies where one has added advantages as these commodities provide clear solid trends. For stocks, wise CFD trading specialist follow a slight different method than that in commodities, and they tend to implement higher frequency trading, but that’s a personal preference.

Crude oil:  A highly technical market providing long lasting, solid price trends. This is ideal for all kinds of CFD trading, low or high frequency. Ideally, one would want to either trade at low frequency and larger size, or smaller size and with higher frequency, it all comes down to expertise and personal preferences.

Nimble Traders Trade Faster than the Crowd

All fast traders who perform CFD trading in successful ways, and understand the markets are slightly higher frequency traders. They are willing to trade a move in the market through several trades rather than just one. They are willing to hedge a trade, especially one that goes wrong, until things become clearer, and they maintain an open mind. Admitting that they don’t know for sure where the market will go next, they simply use CFD trading to get in and out of the market in flexible conditions. Mistakes are allowed, all profitable traders make mistakes and have losing trades. The difference is the profitable CFD trading masters do some homework before entering the markets, and they rely heavily on that flexibility. Another key advantage of CFD trading is that they have great flexibility on time too as they don’t have fixed expiry dates.

What is CFD Trading and What are its Key Advantages?

Many wonder what is CFD Trading so popular for, they know about leverage and no expiry restrictions, but little about its efficiency and increased flexibility.

Few really know what is CFD trading getting so much attention for, by seasoned traders involved in stock and currency trading. Trading CFD offers some unique advantages which go beyond cost effectiveness, tax benefits and high leverage. Though these are important too, the less obvious benefits have to do with flexibility and extra security through better liquidity. CFD contracts which are Contracts For Difference contracts do offer tax benefits to all kinds of stock and commodity traders. But the real benefits are in the fact that stock traders can trade any stock through CFDs even at times when there are short selling restrictions imposed on the market, stock traders cannot! The other key benefit is one way exposure to the open market. CFDs are simply contracts that follow the movement of the underlying asset, at high, one way beneficial liquidity. Being leveraged instruments they have a small daily interest rate being charged or credited to your trading account. That daily rate is charged or credited depending on if you are buying or selling the security in question, such a stock. This daily rate is essentially the interest for the buying power which leverage provides in the same way a loan would.

What One Way Exposure is

As every seasoned commodity and forex trader knows foreign currency trading on one pair impacts many other pairs, as well as possibly some related commodities. And these seasoned traders care about best opening price when opening a trade. And best filling price when closing a trade. What is CFD trading capable of offering is the one way ability to get the best out of the market through best possible price at any moment, since these contracts offer high liquidity. But they prevent liquidity shortages from flowing through and reaching the same traders. That’s why even CFD stock traders can deal in stocks in both ways, and short any stock they want, even at times when classic stock traders are not allowed to, due to short selling restrictions. These restrictions are imposed for few days at a time, during bear markets. But in the world of trading few days may mean missing the opportunity to make a lot of money. However, liquidity shortages are an everyday occurrence on the open markets, and they result in requotes and bad filling prices. Small costs that add up fast, and that’s one thing CFD trading prevents day in and day out in the markets.

Commodity traders love CFDs for trading precious metals such as gold. Affordable exposure, one way beneficial liquidity flow, and low dealing costs make CFDs the top choice for precious metal traders.

Seasoned Traders Rely on Serious CFD Trading

Seasoned traders are all kinds of experienced traders and market specialists. Some trade in outright, directional trades. Others use CFDs to hedge other open trades, such as long term stock investments. And there are those trading forex and commodities, these are usually specialists in one particular currency or commodity that they understand really well. CFDs are absolutely reliable for trading with up to very large amounts of money, and in many cases they are better than the underlying spot market. Because of the liquidity reasons we mentioned and the one way shielding they provide. Beyond all this, there are also clever ways to use CFDs for hedging purposes on real estate investments that utilize mortgages denominated in foreign currencies. As well as ways to reduce capital gains tax on such investments again with the help of CFDs. That is through intentional trading losses on CFD trades which are tax-deducted from one’s tax liability in one country. And yet fully hedged, dollar for dollar, but not taxed, through CFD trading in another country, tax jurisdiction or trading account.

How to Trade forex and Be Successful

Trading is hard and time consuming to learn, but the rewards finally come to those who persevere. How to trade forex the right way boils down to determination.

Determination is the key in all endeavours in life, trading is no exception. Learning the fist steps usually starts on some online forex forum or through a forex trading course, or with the help and guidance of a mentor. These are only the first steps so as to entice the new trader to learn more about this exciting market. Explore the different ways to analyse and trade this market. Failures always happen in the early stages, and we all learn from failure not success. But it is true, successful results tend to make us all feel confident and stop questioning things.

Trading Requires Thinking Outside the Box

Many courses on learning to trade the forex market teach so much about discipline and rigid rules, that the new trader thinks has to follow. But the real world doesn’t work on rigid rules and absolute discipline, if there’s no flexibility and exceptions to rules, things go wrong. As with all missions and endeavours in life, the more rigid one’s plan is, the more likely they are to face something completely unforeseen and unpredictable. Great thinkers are great because they push things beyond the obvious, and question established opinion. Especially established opinion that lacks substantial proof. So approaching the markets with an open mind is a good start for all traders in order to learn how to trade forex successfully. Educational materials are still good, despite their lack of methods and trading tips. If one combined the best elements from various different sources, they can be way ahead in the trading game. Traders also need to accept that indicators, even the best out there, are bound to be false around 50% of the time. This is because they only lead the market for a while, then they need to spend as much time readjusting, and during that time they make no sense. So the trick is to believe that they are bound to be wrong half the time and try to distinguish leading phase from lagging phase.

Traders use divergences formed between market price and indicators to figure out price direction. Market price usually will go in the direction that the indicator hints. But notice that as one indicator shows a divergence, another indicator may be in its own lagging phase. So one cannot rely on one indicator only, non stop. But rather they have to shift from one indicator to another and look for the latest divergences formed.

Implementing Few Simple Strategies without the Pressure to Be Successful

Everyone wants to trade to make money. But the very necessity to make money there and then, sabotages traders and makes them stressful, unable to look at market charts with an unbiased mindset. So traders who have a long trade on for example, tend to see all kinds of buy signals, and yet somehow downplay all bearish signals on their minds. So a good chart reading starts with an unbiased mindset, which requires having no trades on, and ideally when markets are closed. Finding a good forex broker is also essential, as different brokers have different platforms and trading tools. Ideally one needs a broker that makes them feel comfortable and whose trading platform is easy to use. Things such as leverage, pip size stop loss order etc, should be easy to handle. The first steps in trading should be simple and the trader should find trading activity as a enjoyable task. If there’s too much pressure, too much stress and routine involved trading becomes difficult.