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Online CFD Analyses and Testing of Trading Ideas

Traders perform online CFD analyses, using simulator and risk control tools. Their goal is to uncover and hedge potential risks that could blow their accounts.

Online CFD Analyses for Detecting Hidden Risks

Online CFD analyses come in many types and forms, all for detecting different hidden risks. Some traders for example are afraid that their trading is vulnerable to extreme and sudden geopolitical risk. The US dollar and its crosses are all currencies subjected to this risk. This risk is almost impossible to predict. And even those who can predict it come up with poor forecasts, where the prediction spans over many months, so timing is very poor. Traders however can find markets that will move sharply, in one direction when a given specific risk happens. Online CFD analyses allow them to model such risks, and also ways to hedge their trades through those risk-benefiting markets. Many currency pairs in the forex market are subjected to such risks on a daily basis. Yet, some forex strategies manage to eliminate as much as 90% of the risk. The 10% risk means that the market could 1 out of 10 times move in totally unpredictable ways, due to natural disasters, terrorists attacks and so on. During that 10% of trades, the trader may or may not lose money. There is roughly 50% probability that the hedging trade protection will work. But because there is still randomness, similar to a coin flip outcome, it is thought to be a 50% risk. Risk however doesn’t have to result in massive losses, the trader can act quickly when things go totally wrong, and close all trades. So it is okay to win small and to win big, 90% of the time. While breaking even or losing on the remaining 10% of trades. Factors impacting markets to extreme levels are volatility, natural disasters, terrorists attacks and unforeseen economic events. Typically anything that is bad, tends to happen very fast. Whereas good events happen slowly. This is important in devising a hedging trading idea. The US dollar remains even to this day a key currency. But one that is totally unpredictable at times. Because geopolitics can come in and override all economics, for days or weeks. Unprepared forex traders are not aware of this, and a sudden such move on the US dollar usually is enough to wipe out their trading accounts. Because they still hold onto economic and technical analysis and add to the losing trade.

Online CFD Analyses for Energy and Precious Metal Traders

Gold and crude oil CFD traders focus on supply and demand for the days and weeks ahead. The forces of supply and demand are critically important. But these come down to investor fear, and to a lesser extend, down to the US dollar. There is no clear cut relationship between the dollar and commodities. Sometimes both the US dollar and the commodities can rally hand in hand, for weeks. Various in-depth online CFD analyses offer these traders insights into how many risks can be hedged through CFDs. Because trading CFD offers linear hedging and profiting, and unrestricted access to the market. They can rely on CFD instruments more than any other. But this doesn’t stop them from investigating further, and staying within the safety limits. CFDs are extremely good and superior trading instruments but still not perfect, their benefits are limited to $100 per pip. Above this level, liquidity problems will probably arise. So very large size traders may not be able to use them in full. But to small and medium size traders and investors, they are the top tool in their trading arsenal.

What an Online CFD Course Has to Offer

An online CFD course offers wide range of guidance to new traders, regarding CFDs and their benefits. These benefits extend to commodity trading and stocks.

What An Online CFD Course Does

An online CFD course is different from a forex trading course, in that it focuses on ways to improve existing strategies. The whole concept is to introduce CFDs and how they differ from the spot market, when trading forex. An online CFD course addresses issues of liquidity, trade execution speed, hedging possibilities and more. It even goes as far as to cover basic concepts in Carry forex trading, where 80% to 90% of the risk can be completely offset. This is achieved through specialized hedging, but this hedging is possible through high exposure to currency commodities. And in turn, nobody can afford to gain high exposure on these commodities, unless they use high leverage and linear pricing. And these advantages are provided by CFDs. It is not obvious at first, but CFDs are not all about leverage, just for the sake of trading one currency or stock more affordably. They are about leverage combined with excellent pricing, which follows the underlying market very closely. They allow you to trade at any time, no matter how strained the market conditions (with spot forex you can’t do this). And the net achievement for Carry traders, is a reduction of risk. This reduction is not on a day-to-day basis, but it is based on correlations between markets. And correlations are valid over weeks and months. Still, significant amounts of funds have to be committed in a Carry trade. The goal is to gain say $300 daily, from the difference in annual interest rates. Daily interest rates are way too small. But given for example a 2% annual interest rate differential over 200 trading days in the year, is equivalent to 0.0099% per business day. Given a $60,000 CFD trading account, with 200% leverage, where 1/3 of the money ($20,000) goes to the Carry trade, the daily gain on the rate differential is around $396! Part of the remaining funds has to go into hedging the Carry trade, price-wise, through some interest free market. Using CFDs and high leverage. The Carry trade concept requires excellent correlation, and maximum risk analysis. But it does work, just look at USDCAD and crude oil, and their medium term inverse correlation. These are the concepts CFD enthusiasts want to know more about. While other old fashioned investors will look at CFDs just for the sake of their tax benefits.

Online CFD Course for Pioneer Investors

Some investors, due to lack of funds, and lack of access to other markets want to take leverage to a next level. Margin trading in general is beneficial, but only when used after carefully checking the numbers. An online CFD course will focus on money management and leverage, though individual investors might want to dig deeper into the potential risks. Forex trading is tricky and one can fall into a trap very easily, if the market is not understood in term of risk. Online CFD trading helps make the whole task easier, by providing better trading conditions and linear pricing. Pioneer investor and traders are willing to take great risks, usually one at a time. Because it gives them the opportunity to explore new trading methods in the markets. But a gear amount of risk can be modeled and predicted before you make the first trade. This is similar to the first flight pioneers: They wanted to explore more but most failed due to poor risk management. Then came the Wright brothers, who had simulated, calculated and predicted flight risk to a very precise approximation. And their concept was successful. It’s the same with financial trading. If a concept is modeled well in simulated trading, it will very likely work in live trading also. But here is the trick, only CFD contracts provide you with all the tools and benefits for accurate risk modeling and accurate implementation.

What is Forex Leverage and Why it Matters

Most traders know more or less what is forex leverage. Because it impacts their buying power and risk, in their accounts. Leverage is simply trading on margin.

What is Forex Leverage Used for

If you wonder what is forex leverage used for, it is simply used as a way to trade on margin. Or in other words, to trade on borrowed funds. These funds are provided at an interest rate. And in currencies you get paid interest when you are long. And you pay interest when you are short. Directional traders and Carry traders know what is forex leverage used for, and how it impacts their accounts. The vast majority of traders are directional traders. And these simply want to know how the effect of leverage will impact their trading. Leverage increases their buying power, so that both risk and reward are increased many times. Many traders use 100 to 1 and even 200 to 1 leverage. Which means their funds go a long way, but so does risk too. Leverage also determines the amount of money risked per currency pip. So pip value will vary from account to account based on the leverage used. Forex trading strategies range from simple to very complicated ones. Most of these are directional, and leverage can have a huge impact. Both bad and good. That’s why anyone who really knows what is forex trading all about, spends a great deal of time devising a good money management system. In fact, money management is just as important as picking entry points in the market. Beyond that, there are some traders who have more than one account, utilizing different levels of leverage. They use one or the other, depending on the quality of the expected trade. Typically, short term traders need high leverage, much higher than long term traders who simply engage in investing in foreign currency. Nonetheless, one can find a balance, and use the same leverage for both concepts.

What is Forex Leverage to a Beginner?

Beginner traders are delusional about some aspects of forex trading, and what is forex leverage all about. Many of them want to use the highest possible leverage available. Thinking that more buying power will bring in more profits, and that their trading will be profitable from day one. But that rarely ever happens, most of them who use very high leverage end up blowing their accounts far too soon. This is because even tiny mistakes and misconceptions in trading, magnify into massive losses through leverage. And this relates back to overall account size and available funds in the bank account. If the trader doesn’t have a viable money management system in place, the funds can be lost in no time. So it’s best to start with no more than 100 to 1 leverage, and see how it goes before going any higher. Overall however, leverage is a good thing to have. Since it makes it possible for wise beginner traders to finally trade and profit from the markets in an affordable way. Especially in commodity trading, where it would have been way too costly to deal without leverage.

Pursuing a Trading Online Career

The Forex Trading Platform Online You Should Use

(deThe dream of a trading online career can become quite elusive and very costly, because of all the misleading information there is out there. It takes courage.

A Trading Online Career Takes Unbelievable Courage to Develop

Many people pursue a trading online career, yet most end up failing sooner or later because they cannot handle complexity and stress. And sometimes failure actually comes after having made millions of dollars trading, the trader simply loses it all back to the market. To develop a serious trading online career, the pursuing trader must be absolutely strategic in their planning, and even ruthless while trading if necessary. They must be willing to break many rules too. Trading is very similar to military academy and fighting, so as to want to win a war. The problem is that if the general sticks to military academy rules, he will be predictable to the enemy and he will have no chance of winning the war. The forex market for example is indeed a battlefield of the financial markets, and institutional traders do all kinds of deceptive trades so as to fool traders of other competing investment banks. Deception tactics involve misleading announcements, to the effect of ‘we believe this or that currency will do such and such’. While in fact they are planning to trade in the opposite direction. Other tactics are about direct misleading action, so that actual trades are purposely opened in the wrong direction, so as to leak out misleading information. There is no collective conspiracy in the markets, by the institutional traders against small retail traders, it’s just that the bankers themselves are always acting against each other. So there goes the myth of the so called tip that you as a retail trader must follow the smart money. Nobody knows where the smart money is! If it was possible to detect it, then it wouldn’t be smart money at all. These deception tactics are often reflected on the charts, and do confuse even institutional traders, it should not be a wonder then why retail traders, and beginner traders are fooled too. So, in a nutshell there is no smart money you can detect and follow and build your trading career upon. Even the COT report is totally misleading, and cannot predict market direction any better than a coin flip.

How to Win the War of Your Trading Online Career

In your own trading online career you are bound to face the same challenges as other traders have faced in the past. Failure and failure and more failure. And you cannot win consistently because you are afraid to break established trading rules, or still believe that detecting smart money is the way to go. To really trade forex online profitably, you should take existing trading strategies and modify them so as to fit your personality. Feeling comfortable is important. Then you can bend and break many trading rules. One such old rule is about risk control and states that you should never add to a losing trade. This rule is based on the idea that new traders are not willing to take a loss, and just keep their losses open. And it is a fact, this is really what happens. But if your trading strategy is better, you can increase profitability dramatically by breaking this rule. Commodity traders and commodity currency traders do trade through CFDs and have good insights into the commodities in question, usually fundamental insights. They add to losing trades very often, and they know that the fundamental direction will prevail. It’s all a matter of maintaining sufficient margins in their CFD accounts, but CFDs are affordable enough in most cases. Going through a CFD trading guide can help you understand margin requirements, and how far can you go adding to losing trades, or hedging losing trades as well. The old saying is true, those who dare win, and in the financial markets you have to take calculated risks, and dare to break many rules. It is something the market collectively doesn’t expect you to do, because it seems to defy belief. And just like in war battles, conventional wisdom and military academy rules never worked in winning them, certainly not down at the critical point.

Forex Trading for Beginners and Amateurs

Forex trading for beginners and amateurs is a an exciting activity. Even though these people lack knowledge and experience. They have excessive enthusiasm.

Forex Trading for Beginners and Amateurs Later Leads to the Best Strategies

The major problem with forex trading for beginners is that they face older, often arrogant traders who tend to make a big deal out of their success. So as to discourage anyone new in the field, from attempting to make money. Arrogance is a bad thing, and usually leads to complacency. New and amateur traders should hear what others have to say, but nothing should prevent them from having their own, opposite opinion. In the world of forex, many experienced traders are selfish and arrogant, especially those who have committed years and years to a learning curve. Which cost them in heavy losses, and painful lessons. These traders might be still losers, or have achieved marginally small profitability. And that’s why in their minds, cannot accept that a beginner or totally amateur trader could possibly outperform and outsmart them. Jealousy takes control, and it finally makes these older traders perform even worse. The very idea of profitable forex trading for beginners and amateurs cannot sink-in in these people’s minds. It is said that people can’t handle the truth, and in many many cases this is true. People of the dark ages violently opposed the idea of a round earth. And many great thinkers such as Faraday and Einstein were ridiculed by their older peers. The better part of the academic establishment, which had much better education than these great thinkers could not accept the fact that these young people had made discoveries no one else had noticed before. It’s a fact, people don’t take you seriously when your are much younger than them, and attempting to impose new ideas in their fields of expertise. And also, there are people who cannot handle the truth by any means! Even to this day there are people who refuse to believe the theory of relativity is real, even though it is programmed into the GPS system, and makes these people’s GPS devices work.

Forex Trading for Beginners and Amateurs – What these Enthusiastic People Usually Do

Some very good thinkers exist, in the world of forex trading for beginners and amateurs. These people have the drive and motivation to try out new ideas and concepts in trading. Daring to implement new ideas is very important, even if most of these ideas are proven wrong. The fact that the trader dares to do something different, and gain valuable new insights in the process, is brainstorming of more new ideas to come. The FX exchange system, and the world of commodities allow for new trading ideas, radical new thinking and analysis. There is a margin for profitable trading in the overlooked ideas, and new traders are the ones most likely to figure them out. The fact that deniers of reality exist is good for beginner and amateur traders. If these new traders see more of the truth, they can outsmart other traders, and get those profits before anyone else. The forex and commodities market offer enormous earning potential to new curious and daring traders. Especially if they know how to add CFDs to their trading and what is CFD trading in detail. CFDs can help a great deal in implementing powerful hedging and cost effective trading, which old arrogant traders do not really understand nor use.

Forex Trading Managed Account – Facts and Myths

Everything About Forex Trading Managed Account

A forex trading managed account is usually offered by a firm to VIP clients. It offers average to low annual profitability, at moderate realistic market risk.

Pros and Cons of Having a Forex Trading Managed Account

Having a forex trading managed account may be somewhat beneficial to busy people who also can afford to deposit significant amounts of funds to these accounts. The performance of these accounts is relatively low, and usually between 8% and 30% at best. Traders who undertake the task of trading these accounts have to trade at very low risk. The typical low risk forex trading managed account yields no more than 15% per year, more or less. Even if we assume a safe 15% return per year, for the long term. And after all commissions and fees have been paid, it still certainly doesn’t look impressive. Only the well-off can afford to deposit so large amounts of funds, so that 15% per year profit makes a difference to their lifestyle. By comparison, independent investors and traders, even those not trading full time, expect to make 10% to 15% a month (200% to 430% per year). And they usually come close to reaching these goals, through online CFD trading. Independent forex traders are often asked to work for these firms that offer forex managed accounts. It is not as if they have proprietary strategies and irreplaceable traders. There are many traders who can make 15% per year, at almost no risk, it really is peace of cake! The problem with many independent traders is that they have come out of long learning curves, and have lost money to learn trading. So they are trading their own accounts, which are very small ($20,000 on average). Where a 15% a year return would be very small. So these independent traders look to make more, perhaps 5% to 10% a month. It’s not about having the best forex trading platform and 7 computer screens. Independent CFD forex traders know that they have to do more with less. But the fact that many of them are offered jobs at firms who offer managed account services… Means only one thing, a shortage of competent traders in these firms. The good news is that anyone who works hard enough and has the courage to manage market risk and tricky trading. Can in fact match the skills of these independent CFD forex traders, which is remarkably good.

Why a Forex Trading Managed Account is Not Really a Good Deal even for Rich People

A forex trading managed account is simply a low yielding investment. Sure it helps rich people save time, but it still carries risks. There is the risk that the firm may not have good traders for years, resulting in very low profitability. If the firm is a serious one, there is no risk that the funds will ever be lost, but poor trading performance is bad. 15% per year return is by no means good. This kind of return can be achieved by the rich people themselves, dealing in the antiques market. On items such as collectible stamps and classic paintings. The antiques market is very illiquid and slow, but the rich can afford to wait for years. On the other hand the beauty of forex trading, and the whole point of financial trading, is to achieve more with less. And the forex market allows this to happen, when one has done their homework in-depth. The market allows you to profit asymmetrically in relation to the risk you take. And this allows you to make more with less indeed. This means faster profits, profits that are large enough to make a difference. And above all, the market is highly liquid, allowing you to buy and sell at any time. That’s why ambitious people will always consider becoming independent forex traders rather than considering classic investments.