Category: CFD Trading

Top 7 CFD Trading Strategies & Tips, Which Can’t Be Avoided

CDF Trading StrategiesTraders who engage in making random trades don’t get far. Astute traders rely on coherent CFD trading strategies. These are traders who follow basic paradigms from the first day of trade.

CFD strategies employed by traders encompass in two main categories; Fundamental and Technical categories.

Fundamental Category

Fundamental traders call for scrutiny of any company fundamentals in any given industry. Some of the factors worth checking include:

  • What’s the company’s position?
  • Who sits on the management team and what are they known for?
  • How does the company’s cash flow look like?
  • What is the return value of the corporate’s assets?
  • What is the track record and history the company has in regards to retaining profits that fund growth in the future?

Fundamental trading strategies come into effect when traders engage in buy-and-hold trades in the long term.

Technical Category

Technical trade strategies devolve further into two sub-types; mechanical and discretionary.

Range Trading Strategy

Mechanical trades end up as the flavor for Range Trading.These are strategies that follow the set and forget trading rules programmed to take effect automatically.

Discretion Trades Strategy

These are trades that are exciting, dynamic and active. The trader uses analytic tools for the purpose of spotting emerging trends. The trader uses his/her intellect to conduct profitable trades. As a trader, using analytical tools gives you an insight look into future price movements. You will need to learn how to get the best analytical tools and how to use them to your advantage.

CFD Trading StrategiesNow that we know the basic , let’s delve further into effective ways to utilize more strategies:

Trend Following Strategy

Trend Following is a long-term strategy which has similar characteristics to buy and hold trading strategies. With Trend Following, Wave Theory helps the trader identify a particular trend.

Experienced traders term Trend Following as a long-term strategy which aligns with the long-term buy and holds strategies. By using this strategy, traders hold on to their stock for months as they ride a price trend to its conclusion.

Using a Wave Theory strategy, traders can quickly identify a pattern.  With this information; you can purchase additional shares as the price will fall before it skyrockets again. Afterward, you can close your position when the wave reaches the ultimate peak.

However, the trader doesn’t actively purchase or dispose of when prices spike upwards. He/she concentrates on buying more shares when the prices start going down and closes his/her position when the wave reaches the ultimate peak.

News Playing Strategy

News Playing is composed of opportunistic trades. By looking at the trending business news, it takes little effort to imagine the direction of the stock price of a big corporation heads after a breaking news story.

Traders using the News Playing approach will short the stock almost instantaneously. Traders tend to sell out before the prices plummets, and they choose to purchase shares back closing out their position after a remarkable price drop.

Using the above strategy, a trader makes a profit when they spend fewer amounts of the commissions and fees. To take advantage of the News Playing strategy, traders keep track on the news and their patience helps them cash in current affairs.

Spread Trading

Also known as scalping spread trading is one of the most active trading strategies. The trader is capable of identifying small but significant opportunities in the difference the asking price and the bid of a company’s stock.

The dealer exploits the gaps the soonest he/she finds them and in return, he/she will reap in a steady pile of small gains all through the day. With these CFD Trading Strategies, traders stand to make significant trades every day!

Have you chosen your CFD trading platform? Read our review on one of the best CFD broker here.

CFD Vs Spread Betting-Which is Better ?

CFD Vs Spread Betting which is betterInvesting in the trading markets is never easy, especially if you are looking to reap higher benefits and returns on a regular basis. However, with CFD and Spread betting trading, you can add variety to your investment portfolio and earn desired profits in the long run. Here, discover more about CFD Vs Spread Betting strategies and find out which one is better for you as a trader.

Difference Between CFD and Spread Betting

With leveraged investment products, investors can get enough exposure on the market with a minimal initial deposit. CFD (Contract for Difference), as well as Spread Betting, are excellent strategies for investors who are looking to trade in the index, forex and equity markets. While CFD is basically a contract between the financial institution and investor where the trader takes a stand with regard to an asset’s future price or value, Spread Betting provides investors with the opportunity to determine whether the markets would fall or rise in the long run.

Spread Betting vs CFD Trading

Spreading betting is an ideal option for traders who want their profits to be taxation free. It is meant for traders who prefer controlling their deal’s size. In fact, if you are one of those traders who wants to deal in small sized shares and intends to deal in the markets across the world using in UK’s sterling then spread betting is an excellent choice for you. On the other hand, CFD trading is appropriate for traders who wish to utilize DMA for trading shares and forex. This type of trading strategy is also apt for investors who wish to have a professional or corporate account and are looking to hedge physical assets in their portfolio.

Spread betting is also different from CFD trading technically. While spread betting lets traders speculate the markets. Thus, traders bet on a price range on the basis of the data they have with them. Additionally, all the spread bets come with a fixed date of expiry. A CFD broker, on the other hand, allows investors to trade contracts on the prices acquired from the markets. CFDs do not expire apart from binaries, options and futures.

In a nutshell, when we think of CFD Vs Spread betting, investors must understand that they are not meant for all kinds of traders. In fact, these products are suitable only for highly experienced investors who understand the underlying risks and are willing to take advice wherever necessary.

CFD Trading Vs Forex Trading: A Quick Understanding of Both

CFD Trading vs Forex TradingIf you are thinking of making some passive income, then perhaps Forex trading and CFD trading are the hits of your list. But while you do your speculations, you must be looking for some clear explanation on why Forex Trading and not CFD trading or why CFD trading and not Forex trading. Basically, you need a clear idea about what is the difference between the two and what is common in them. In this article, you will read about CFD vs Forex trading.

Similarities of Forex and CFDs

There are various similarities between the two such as:

First, both the types of trading get executed in a similar trade process, i.e. traders can choose to exit or enter the market in both rising and falling scenarios.

Second, the platform of execution for both Forex trades and online cfd trading are same. Also, these have the similar pricing methods. In both types, the trades are executed in the over-the-counter (OTC) market. The OTC market is a complete electronically controlled platform that works within a network of banks. There is no physical location for this market.

Third, between CFD trading platform and Forex trading platform, no one charge finance fees or commissions for any instruments. Only the cost of trading gets spread.

Differences between CFDs and Forex

Forex Trading Vs CFD TradingNow, if you are clear with the similarities of these two types of trading, you can quickly educate yourself with the differences as well. This will allow you to have a better analysis between the difference CFD & Forex trading.

Firstly, CFD trading involves a highly versatile market. In this form of trading, you can purchase contracts pertaining to a diverse set of markets & different types of assets such as indices, shares, commodities & currencies etc. But, Forex trading, as known to one and all, is purely about currency trading, where one currency is traded against another currency .That means, CFDs give you the opportunity to choose from different markets, whereas Forex trading gets done in uniform lot sizes.

Secondly, the two types of trading differ in terms of the factors that influence the respective markets. CFD trading UK mostly gets influenced by factors like supply and demand of the traded commodity. Even the changing trends of business sectors affect the CFD market.

Whereas Forex Trading primarily gets driven by global events such as international political changes or large employment shifts.

However, remember that either you do Forex trading or CFD trading, none will entitle you to have the actual ownership of the assets you will be purchasing. So, if you are having a dilemma about CFD Trading Vs Forex Trading, then you majorly need to study the current scenario of the factors that affects the respective market, otherwise, there is no major difference. Actually, in CFD trade you shall have the opportunities to trade different type of instruments. Hence in order to be successful in CFD trading Australia you have to choose one of the best CFD broker having better CFD trading platform.

What is CFD Trading? | CFD Trading Explained!

what is cfd tradingCFDs, which is a short term for Contracts for Difference, is a new market that is gaining popularity fast and getting noticed by many retailers across the planet. CFD translates to an agreement between two parties willing to exchange differences between a contract’s opening and closing price. Traders use online CFD trading broker for the purpose of trading and speculating price movements in plenty of financial markets and can see prices fall and rise. CFDs are also used as a platform to trade short (sell) and profit from falling prices & can choose to go long (buy) and profit when prices start rising. CFDs allow traders plenty of trading flexibility making it easier for them to rake in profits from financial markets both when prices are rising and falling.

Moreover, Contracts for Difference is a leveraged product; this means that traders only use a marginal amount of their investment to maximize their market exposure.

Benefits of CFD Trading

With a leading investment platform offering CFDs, investors are bound to profit from the following actions:

Benefiting from markets falling and rising

If you speculate that a market is likely to experience a loss of value in the shorter term, traders are asked to use CFDs to sell and will experience a profit when prices fall. However, remember should the trade price move against the trader’s bet/hunch, then he/she will suffer a loss.

Best investment potential leveraging platform for a reduced capital outlay

Traders using Contracts for Difference use a slight fraction of initial capital outlay for a sizeable direct purchase.Under CFDs trading rules, operators can use an amount such as 10-20% of the total equivalent and use it to trade and magnify their return on investment.

The move, however, works wonder should the market moves towards the expected direction. But the move also comes with higher risk levels in instances where the market moves against the trader. 

Global Markets Access

Contracts for Difference grants traders access to numerous markets across the world that wouldn’t have been available to them from a singular trading platform.

Traders use best CFD trading platform to speculate on price movement on stages such as; Wall Street Index, FTSE 100, or the Singapore Index. 

CFDs Hedging

Many investors use CFDs as hedging tools for the purpose of offsetting losses in their portfolios. With the ability to short sell and make a profit from falling market prices, investors can retain their portfolio without accruing any significant loss in the portfolio’s overall value.

Bottom Line

Contracts for Difference derivative products make it possible for investors to participate in live market price movements. Traders don’t need to own the instrument upon which the contract is based.

Traders use online CFD trading platform to speculate future market price movement regardless whether there will be a rise or fall in the price. Using CFDs, investors can short sell and profit from falling prices.

 Investors use this platform to hedge their portfolio disposing of any potential losses in their physical investments value.

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