Page 224 – XTrade

Trading CFD Strategies for Success

Trading CFD strategies and ideas allow for above average results and for better risk control are perfectly possible to implement. And wise traders know how.

Trading CFD Strategies You Can Develop

Some trading CFD strategies you can develop today. They can include trend-following and hybrid strategies between day trading, swing trading and directionless trading. The basic concept in all these ideas, is to use confusion and volatility in your favor. These are given market facts, and will never go away. So instead of planning ahead to execute a single trade from A to B, which is what conventional wisdom dictates. You should include a more complex path, from A to B, but also from A to C, in case the trade takes too long, or fails to yield a profit. They don’t teach such methods and ideas in the average forex trading course, because the mentor will probably have some kind of tight stop mentality. But tight stops never really work, and no one made good money trading like this. Good trading CFD strategies take trading beyond classic ideas, and into hybrid trading. You are neither a day trader or a swing trader, in fact no established term may define your trading. Because the currency markets trade in all kinds of patterns, where confusion and volatility rule. You can still be a specialist in your market, but there is no need to believe in specialized tradings styles. Low volatility means you will have to trade almost like a scalper. High volatility means you will have to trade differently, and often against the daily trend as well. Many established rules in classic trading will have to be broken and adjusted through modification. As a rule of thumb, you will know that the market may go from A to B as your analysis suggests, but it will do so in the most confusing way possible. This is a natural tendency of the financial markets. Good CFD strategies are very profitable, but require using large stops, and a plan B. A plan where if the first trade idea fails, the probability for plan B becoming successful trade increases dramatically.

Trading CFD Strategies for Success — It may seem as though profitable trading is about precision, tidy accounts and tight stops. But profitable, really profitable commodity and forex trading is about messy looking accounts using large stops. The more messy the account looks, with large open losing trades etc, the more voltility it can take. Which results in flexibility and making a profit through plan B, when plan A fails.

Trading CFD Strategies and Risk Control

Beyond the classic methods for risk control, trading CFD strategies allow for affordable hedging through commodities. This is the holly grail of hedged Carry trading. But the key concepts apply to directional currency trading as well, as long as the market is a commodity currency. Anyone who knows what is CFD trading, and the benefits it offers, can figure out the role of commodities. Markets are interrelated and commodities are correlated to specific currencies. All good CFD trading platforms offer both commodity and currency trading. You will have to become a specialist in the underlying market, crude oil for example. That is the very underlying market which makes up both crude oil price and USDCAD price trends. You can control much of the risk by viewing both of these markets as one entity, and identify opportunities occurring daily, weekly, etc. One time it might be a day trade, lasting 1 hour. Another time it may be a trade lasting 10 days. You will have to use large stops, hold trades overnight, and have a plan B in case plan A fails. If a trade takes longer than usual to become profitable, then the probabilities will be against that trade. And will favor trade plan B.

Trading CFD Online with Confidence

Trading CFD online with confidence and determination flies in the face of common sense. Such traders often do things which seem to defy belief and price action.

Finding All the Confidence for Trading CFD Online Profitably

Trading CFD online profitably does require courage and some determination. Discipline is okay, but is not the key. Confusion and volatility are the forces that make the markets work. It’s okay to be disciplined, but remember that rules may have to be broken. And things can get messy before success if achieved. In fact you cannot trade the markets if you believe in absolute order and discipline. Good traders are planning ahead, using loosely defined plans. As the more detailed a plan is, the more likely you are to run into totally unforeseen price action. Good traders are patient, but also ruthless when necessary. They think and act a lot like generals in the battlefield. Battlefields are not orderly and easily predictable situations. The general is allowed to break rules, and to even ignore losses during critical times. A moment of hesitation can make a big difference. And that’s how bold forex traders think also. They know trading CFD online is risky and things can get messy. So that no tight trading plan will really work. Good currency trading is about loosely defined, flexible strategies. And the good thing is that in all that volatility and confusion of the markets, often the big opportunity appears. And that’s where big money is made. The profit margin is available because the majority of traders out there don’t dare to jump in. as they don’t dare breaking any of their set rules. And finally those who dare, with loosely defined plans, and little preparation, end up winning.

Trading CFD Online and Coping with Early Losses

Trading CFD online is almost like a real war situation, and early losses will surely intimidate you. Even experienced traders lose confidence on some days or weeks. When this happens they cease trading, watch the markets again, and set new trading ideas. Then they go in again and again. Online CFD trading will not make you a better trader just be trading more. It will make you a better trader by reviewing your trades one by one. Forget all about statistics and how many trades out of 10, were successful. It’s about each trade individually. Especially when day trading forex is easy to fall into the trap of statistics, and try to make prediction about the future, based on recent past performance. You have to deal with each trade on its own, and even regard profitable trades as losers. Because even profitable trades went through risk, and some possibly went through unacceptable risk. So the bottom line is about risk taken on each trade, and what the real odds were. Whether or not the trade in question was closed at a profit, has no much relevance in objective assessment. All trades need to be looked into as losers, where the trading plan failed. Profitable trades can very easily mask weaknesses in your trading, giving you all kind of misleading impressions. Losses are welcome, as long as you learn from them. But all trades contain an element of overlooked risk.

Online CFD Training for Investors

Online CFD training for commodity and currency investors attempts to teach the benefits of CFDs. As well as interesting ways for enhancing classic investing.

Online CFD Training for Already Successful Investors

Online CFD training offers classic investors the opportunity to extend their investing activities to CFD trading and short term online CFD trading. These investors don’t want to learn forex trading, as they already know how to invest in the markets and trade at least few currency pairs. They simply want to use CFDs for hedging risk on their old fashioned investing ideas. And for minimizing dealing costs. Many times, they are faced with frequent transactions in the markets, where it makes little sense to deal through a classic spot market broker. A CFD broker on the other hand allows them to deal just as effectively in the markets, but at much lower costs. Old fashioned investors are hard to change on their trading strategies. And they might not even be open to radical new ideas on market analysis. Especially when they are already making profits, and they feel content with what they have. The idea on saving on dealing costs and hedging downside risk, is about as far as they will go. They tend to trade at large size however, much larger than beginner forex traders do. Online CFD training courses will offer them new exciting ideas through the presentation of the benefits of CFD contracts. All for the purpose of enhancing their risk to reward figures. As we get older we all oppose radical changes, so these investors are unlikely to become day traders. But they keep on moving further and making progress by digging deeper into their established ideas, and by improving the way they analyze markets.

Online CFD Training is for Everyone

Online CFD training goes above and beyond generic CFD content, because key questions are answered in detail. Classic investors will have many questions on the tax benefits of CFDs and on tax issues in general. Since many of them have to pay capital gains tax on their investments, and they have been doing so for decades now. Online CFD trading will allow them to check their investments more often, and at one glance. Another thing with online training is that both old and new investors can get together in the forums, and exchange ideas. The older generation will focus on hedging downside risk. Whereas the younger traders will want to know more about fundamental analysis, which the old investors have priceless experience in. So there is common ground there for exchanging ideas and tips. And these traders and investors actually do meet in the market later on, as two of them may take the opposite sides of the same trade. This doesn’t mean that one is smart and the other is not. But that they have totally different objectives and focus on so different time frames. The old investor hedging a large investment, sees hedging through CFDs as insurance. And they are happy with the trade even if it is a loser. Just like they lose money by paying their car insurance premiums. Whereas the CFD day trader wants to make a profit on every possible trade. Ultimately however, it is the old investors who get the long term trends right. And they make markets move in solid trends.

Advancing Online CFD Trading

Online CFD Trading for Experience Traders

Advancing Online CFD trading is about innovating trading methods, and improving skills. Including psychological resilience and some essential personal skills.

Online CFD Trading for those Determined to Win

Online CFD trading for those determined to win, is about courage and personality. Unique personality traits that require you to be different than people around you. Online CFD trading is about determined traders, each one of them has different objectives and goals. Their goals in life might be about making money for repaying some debt, for helping someone else, or for all kinds of reasons. It doesn’t necessarily have to be about personal gain, supercars and boats. Online trading is for everyone, and some people do come up with creative, inventive strategies. These traders become greedy, for different reasons each. Though it is likely that traders having social goals may in fact be more determined to win in the financial markets. Self-centered traders on the other hand may or may not be successful, depending on their personal life story. In order to become really devoted to innovating trading. One has to make sacrifices, even stop being around negative thinkers. Juts like any other risky business, forex trading requires an enormous personal effort. You cannot pay someone else to trade for you, you cannot use widely and commercially available trading systems and expect to have an edge. Success has to come from within, and determined traders have a very strong motivation to beat the markets. Because something important to them, depends on that success.

Online CFD Trading above and beyond 5% a Month

Online CFD trading above and beyond small monthly returns, requires heavy modifications to existing trading methods. And also figuring out how other traders. And how the market as a whole tends to think, at times of strong trending action. The market is not always right! So those determined to learn how to trade forex and predict both the volatility and price direction of forex exchange rates. Will stop at nothing to make this happen. They know that they will have to fade other traders’ opinions, and even question opinion of top investment banks. Above all, they will have to question the market itself. But that’s the way it really is. Traders who don’t question the actual trend in their market, end up chasing momentum. And momentum is deceptive, because it allows you to win at first, early in the trend. Then once your confidence is high, on the next trade, momentum reverses and you suddenly have a large losing trade in your hands. Traders seeking innovative methods, know that momentum is deceptive and dangerous. It cannot possible be used as a basis for solid trading success. Some of the good traders out there focus on using CFDs for semi-directional strategies. Where it is okay to carry hedged losing trades through the month. And they are able to capture small profits on the directional moves. This is one example of unthinkable and unacceptable trading by disciplined traders’ standards. And yet it does work.

Trading CFD Tips for Struggling Traders

Trading CFD tips can help struggling and losing forex traders improve their trading dramatically. Some concepts are explained and presented as food for thought.

Hot Trading CFD Tips for Losing Forex Traders

There are many trading CFD tips. The most important in our opinion is the ability to judge a trade before it becomes a loser. This can be achieved by developing a notional stop strategy, in the time domain. You can still use price based stops, preferably large ones. But a notional stop in the time domain, will warn you in advance. And it will allow you to close that would be loser, before it becomes a loser. One of the best trading CFD tips for the average forex trader is the notional stop concept. It works well on day trading too. The trader simply allows for a maximum of 20minutes to 30 minutes of waiting time, for the trade to prove itself. If the market fails to move in the trade’s direction, and the time has elapsed, then the trader closes the trade. And oftentimes they manage to trade would be losers while they are still at break-even level. This alone saves them $1000s in avoided losses. Why wait for price to trigger your stop, when you know that specific time limits can be used as notional stops. Stops in the time domain are based on probability. It’s simply the idea that if something seems to be taking too long to happen, the probabilities favor that it will never happen! It’s a fact of life, and of market price too. You can learn how to trade forex this way, and cut your losses dramatically. First do some research on your favorite currency pair, and do some hypothetical trades in your head. Do it using various time limits, and test to see what would happen if you exited the losing trade, or if you reversed direction. Always based on that notional stop in the time domain, which puts a time limit on waiting. You will see that the market does in fact obey some kind of probability, and staying in a trade too long is not a good idea.

More Trading CFD Tips

Another one of the best trading CFD tips is that of forex time zones. If you combine it with the tip on time domain stops, you will have much more clarity and confidence in your trades. Currencies tend to make their biggest moves during active trading times. These are the times when the countries of the corresponding currencies in the pair, are open for business. And it’s usually the daily business hours when stock and commodity markets are open for trading in that country. So EURUSD is likely to make a move when either Euro or Dollar related news hits the market. When does this news hit the market? When either London or New York markets are open for trading. So even though forex trading works 24/5, you can see that some trading times are more important than others. Now go a step further, and look into the active trading time zone of any currency pair, where a move is expected and most likely to happen. And apply notional stops in the time domain. So that if the market fails to move, and more than 20 or 30 minutes elapse, you get out. Does this help you limit losses to a minimum, and still capture profits? If so you will make progress. But remember that is more important not to lose, than to win. So use large stops in the price domain, even if you are a day trader. And use tight stops in the time domain. Tight stops in the price domain are for the naive and the delusional out there. And instead of protecting your capital, they cost you dearly. The same applies to stops placed near yesterday’s high or low, or near daily LSS pivots. These levels are bound to be tested daily by the market. CFD trading platforms allow you to implement nice time zone based forex trading, and to handle your trades very efficiently. At phenomenal liquidity. CFD trading platforms may even include stops in the time dimension, in the intermediate future.

Using a Single Forex Trading Indicator

Traders wonder if they can trade currencies successfully, using a single forex trading indicator. Combining different indicators is more tricky than it seems.

The Truth about Using a Single Forex Trading Indicator

Using a single forex trading indicator alone, is often thought as a way to simplify trading. Day traders especially do believe in this concept, since they have to deal with fast changing, live forex rates and forex news stories. These day traders however come prepared into the market, having done a lot of homework based on the daily chart and yesterday’s close. And they do use more than one indicators for that. In day trading, they can resort to a single indicator, it is possible to some extend, though it is not the best way to trade. Using a single forex trading indicator alone, does bring in simplicity and agility. But that indicator would have to be price based. If price is used as an indicator, on its own, some predictability is possible on the market. But when the market is due to give a false signal, or some other confusing pattern, all price based indicators ultimately fail. There goes the old saying that the market is always right. But in fact, it isn’t always right! The market can be wrong, and so using price or price momentum alone, as indicators for trading can be a very big mistake. Price may move in the misleading direction just because of profit taking. Making the market seem moving in that direction, but profit taking is not a real trend. Real trends are based on objectives and targets that carry a lot of weight. That’s where the market want to go, and if it doesn’t go there today or tomorrow, it will still go there before the week is out. So be careful of price and momentum indicators, because they can be way too misleading.

The 10 Day Moving Average as a Single Forex Trading Indicator

The 10 day moving average is an example of a forex trading indicator which can be used more or less, on its own. It is an average (which means price and momentum and misinformation) but it is based on the daily close. The daily close of most markets carries more weight than the high and the low. Because there is more meaningful trading volume during the last trading hour of the daily session. The 10 day moving average does not yield clear forex signals, but it does hint near term direction and momentum. Especially when a new trend has just started, traders can confirm early in the trend the validity of the move. All they have to do is check contrarian indicators, for just one time. And if the move is confirmed. Then they are good to go and trade on the 10 day moving average alone, for several days at least. The idea is to buy the market if price is above this average, it’s that simple. Using too many indicators, and using them all at the same time is too confusing and not recommended. Wise traders use 5 to 7 good indicators, in different ways. And they also expect that all of these indicators will have failures at one point or another. Using a single indicator alone is not a good idea, but if it has to be done, then the 10 day moving average can be used for several days in a row. But only on newly started trends, confirmed once, by some other indicator, such as contrarian indicators confirming reversals.