Forex, understandable a trading of two international or two foreign currency exchange speculative market, is as old as the existence of money as a means of exchange for goods or services. The difference in their accessibility to the ordinary man is the availability of enabling technology with time. In other words, when the transaction was exclusively between countries and major banks, trade was so limited.
Nowadays, with internet technology and advancement in modern trading tools, almost anybody can now trade. The situation has been further enhanced with the leveraging power of Contracts For Difference (CFD). Specifically, this article is a focus on CFD trading strategies. The critical factors being discussed here would lead to profitable Forex trading if implemented.
- CFD Trading Leverage
A leveraged stock market opportunity that gives you access to greater funds than trading actual stock market. With CFD trading, you do not have to pay for the full value of the trading position you have chosen. Rather, you put up a deposit or margin, from as little as 5%. In other words, a trader can leverage his/her trade up to 20 times the initial capital.
- Develop a Trading Pattern That Suits Your Personal Profile
Educate yourself properly. A good CFD trading plan is critical to your success on a long term.
Identify what you are good at and keep it
CFDs can be used to trade an extremely wide array of financial products and this means they offer a way to easily start dealing across a large cross-section of the market. For example, a trader that has interest in shares, the level of the price of oil, or the exchange rate of the British Pound against the US Dollar, can deal in all these markets from one account of a single CFD provider.
- Use Stops Religiously
Stops enable you to protect your worse-case scenario by limiting your downside (unless the stock caps considerably).
Stop loss that limits the downside – A stop loss order is an automated instruction given by the trader to deal if the price runs counter to speculation. A stop order can either be attached to an existing position, or it can be used to initiate or start a new position.
Summary: As a leveraged (instrument) system of trading, CFD is arguably the most powerful. The benefits are enormous if well planned, and losses could be overwhelming if trading position is not well articulated. CFD trading strategies as discussed in this article is an analysis of 3 critical factors to profitable Forex. These strategies work and would always work if well implemented. Give them a try.