Total Trader » CFD Trading

CFD brokers and providers: How to Select One

Total Trader — Wed, 10 Mar 2010 00:26:40 +0000

The choice of an online CFD broker is one of the keys to successful CFD Trading System.

These 7 points must be considered when choosing a CFD broker online:

1. Your commission or brokerage fee in each direction

CFD Most have a placement of approximately 0.1 to 0.4% of traffic. There is also a minimum cost of about $ 10-20, with commercial operations of small influences considered. Some brokers have no commission. Some CFD brokerage commissions are negotiable, or are different depending on whether you are a company in the industry, so do not forget to ask us!

2. Their margins

Many manufacturers are CFD margin of about 10-20%. This Menas have some utility, 5-10 to 1. There are some CFD market maker that required a margin of 30-80%, depending on the CFD storage that you want to do business. So if you use a lot of work to verify the amount of debt financing available.

3. How many CFDs are traded

Do you need the top 100, 200 or even 300 of stock trading?

4. How many are shortable CFD

Many CFD shortable than their underlying shares, which are not shortable. This is one of the many reasons why CFD trading has become more popular. Even if you have an extensive list of CFD shortable for your trading system works correctly, then check the detailed list of suppliers CFD shortable if possible. Sometimes they are available form their website, and sometimes not.

5. Charging interest

Is considered a cost of interest on long positions for more than a day. Using CFD brokers that prices vary a bit ‘and are about the overnight interest a bank or cash. The rate of long positions is usually 3% above the reference rate. If you are short range, so the interest will be paid to you, with speeds of 3% is taken under the lid.

6. What are the order types that are available ?

Some CFD providers do place your order at the point where the market is closed, and when the market is open.

Other suppliers on the other hand, it must give orders for positions in the CFD market hours.

7. Offer Direct Market Access CFDs, where prices are the same as the underlying shares or the distribution is widened?

Using CFDs to Hedge Your Share Portfolio

Eden — Mon, 08 Mar 2010 02:49:38 +0000

In recent years, Contracts for Difference, or CFDs for short, have become increasingly popular due to their liquidity, ease of trading and leverage.

So what is a CFD? Essentially, it is like a margin loan on steroids. When you take out a margin loan to buy shares, the idea is that the lender will accept your shares as collateral and loan you further funds to purchase more of the same shares, thus leveraging your capital so that you receive the benefit of the price movement and dividends from a greater number of shares than you would ordinarily be able to afford.

But while margin loans are usually around 50-65 percent for ‘blue chip’ shares, a CFD allows you to have all the benefits of share ownership along with a finance ratio up to 95 percent of the share value, depending on the market maker. You receive all the benefits and risks of share ownership without actually owning them.

Because your investment is only 5-10 percent and the other 90-95 percent (the ‘difference’) is effectively loaned to you, with interest charges, the leverage is huge. If you’re able to predict the short term movement of a share price with a high degree of accuracy, it can result in some serious cashflow.

You BUY CFDs if you think the share price will rise – and pay interest on the difference. You SELL CFDs if you think the price will fall and receive interest on the difference.

But what if you’re not interested in trading CFDs? Do they have any other uses? Absolutely! You can use them to hedge your existing share positions against price falls.

Let’s use an example to illustrate.

Say you had $100,000 that you wanted to invest in the stock market for dividend income and associated tax advantages. Let’s also say that XYZ company’s shares are currently trading at $20 per share. You would then be able to purchase 5,000 shares using your $100,000. But if the stock price dropped to $12 (think, global financial crisis) then your share portfolio is now worth only $60,000 – a loss ‘on paper’ of $40,000 of your hard-earned capital.

But if you had ’sold’ 5,000 CFDs to the market at the same time as your share purchase, at 10 percent margin, this would’ve cost you an extra $10,000. When the share price dropped from $20 down to $12 the value of those CFDs would have increased by $40,000, thus offsetting the capital loss on your shares. Because you SOLD the CFDs, you would also receive interest on the remaining $90,000 that you have effectively ‘loaned’ to the market, for the period during which you hold them. You have just used CFDs as a form of insurance against loss in value of a significant asset.

The beauty of using CFDs to hedge against capital loss, is that, unlike options or futures, they never expire. So your ‘insurance’ investment is a one-off payment for as long as you hold the shares. What’s more, you can also retrieve your initial outlay, plus or minus profit/loss, at any time. For example if, after holding the shares for a few years, the price was still only $20, you could sell the shares for the amount you paid for them and at the same time, close out your CFD position and receive your original $10,000 back. In the meantime, you’ve received tax effective dividends or bonus share issues etc, risk free.

Now, let me tempt you with a little thought. Say you used a margin loan to purchase your XYZ shares so that you can now buy 10,000 instead of 5,000 shares. Then you would sell 10,000 CFDs to the market at a cost of $6,000 to hedge your new position. So now, you receive dividends and other benefits of share ownership for twice as many shares – all risk free.

Bear in mind, that if the share price skyrockets, the capital gain you would’ve made would now be offset by the loss on the CFD value. This goes with the territory when it comes to hedging. Taking out the risk also leaves the potential rewards on the table. You would also need to arrange with you broker so that there was a link between your shares and CFD investments – otherwise you might receive margin calls.

What are the subtle differences between trading CFDs and trading stocks?

Total Trader — Wed, 03 Mar 2010 00:08:07 +0000

To explain CFDs it is important to know what the key differences are so you can grasp the concept easily.
The main differences are:

CFD financing

CFD margin; and

CFD brokerage is lower

CFD Financing
The CFD financing simply means that for every day you hold the position overnight you are charged a small financing fee. This rate of financing is usually the overnight cash rate plus or minus 3% and on a $10,000 position will work out to be around $2.20 per night. You can consider this CFD financing a small cost to access more opportunity than what is available with traditional Stock trading.

CFD Margin
The CFD margin refers to the amount of money that you need to deposit in order to control your CFD position. For example, if you wanted to control $10,000 worth of BHP share CFDs then you would require 10% or $1000. The CFD margin means that your money is always working much harder for you.

CFD brokerage is quite low
And lastly the greatest benefit with CFD brokers is that your brokerage charge is usually quite small compared to traditional sharetrading. In Australia you might expect to pay between $20-$30 for a $10,000 stock market trade.
If you were to take the same position with CFDs you will pay no more than $10
As you can see, the concept of trading Contracts for Difference or CFDs is quite simple and I trust that this guide has allowed you to get up to speed on this exciting new financial product.

CFD Trade Providers – Choosing the Best

Total Trader — Tue, 02 Mar 2010 03:51:43 +0000

CFD trade is gaining popularity among investors as a good alternative to share trading. This reality is giving CFD providers the opportunity to grow as an industry. As a trader you would want the best deals from your CFD provider. Unfortunately, you cannot have everything in one package. However, with the stiff competition in the market, CFD providers are continually upgrading their services and platforms.

These trading platforms and special factors can help you determine the best CFD provider you will be using.

You may be daunted in choosing the right CFD provider for you. Before you plunge ahead and choose, ask yourself the following important questions:

How do you want to trade? Do you want to trade CFDs through a Market Maker or Direct Market Access?

What do you wish to trade? Check out the CFD provider and the number of CFDs available to trade. Examine the current list of CFDs that are offered by the provider that you are intending to trade with.

What is the trading platform and features of the CFD providers? The scope may include margin requirements, commissions or brokerage, the order types that will guarantee convenience with your time and lifestyle.

Profit Using Contracts For Difference

Total Trader — Wed, 10 Feb 2010 02:45:44 +0000

Trading coaches everywhere are often asked the question ‘What CFD day trading strategies are the best to be consistently profitable in the markets’.

Today we’ll uncover the top 5 reasons why day traders love to trade Contracts for Difference over futures or options trading.

1. No overnight interest charges

Whilst the financing for CFD positions is relatively small, it is still a debit to your trading account and ranges between plus or minus 2%-3% over your countries cash rate. With interest rates so low at present this is a negligible debit but you can avoid it by closing your position before the trading day is over.

2. You get access to a huge amount of leverage

Leverage is obviously a double edged sword and CFD traders know this first hand. A huge advantage of trading CFDs is the leverage you get access to and many providers allow up to 20 times your account size.

If you had a $5,000 position and make a 5% return, you would make $250. With leverage you can leverage your position 10 times and for the same trade you’d make $2,500.

Don’t forget that if the trade goes against you then you will lose 10 times the amount.

3. The ASX 100 stocks have plenty of liquidity

The beauty of CFDs is that they mirror the liquidity of the underlying market and if you stick to the ASX top 100 stocks then you will have no worries with liquidity there.

Direct Market Access CFDs are the best option for active short term trades as there are no requotes compared to a Market Maker.

4. Your Trading Commissions rates are low

When CFDs first hit Australia they were commission free which seemed quite incredible at the time. Since then they have increased brokerage to around 0.1% of the trade size or $10 minimum which is fantastic. Certainly for short term day traders, access to lower brokerage is exactly what they are looking for.

In fact most CFD brokers allow you the opportunity to trade index and commodities commission free.

5. Opportunities trading CFDs with current volatility is huge

Day traders need the markets to move as there is nothing worse than a sideways market when you need to get in and out intraday.

Profiting from short term moves requires a volatile market and when you combine volatile markets with CFD trading you have an incredible opportunity for profit.

Advantages of CFD Trading For Traders

Total Trader — Mon, 08 Feb 2010 23:18:27 +0000

CFD means Contract for Difference.

There are various advantages of CFD Trading for traders.

Main benefits of this Trading are:

1. Trading on Margin: By using margins, CFD Trading gives an opportunity to the individuals involved to hold more value than they actually contribute. Contract for Difference allows the traders to get higher returns on the investment.

2. No purchase of assets is involved: In Contract for Difference Trading, traders are not required to purchase the assets. This trading involves an agreement between the broker and the trader. This agreement is related to the value of the asset and no purchasing is done.

3. Stamp Duty not required: In case of CFD Trading, stamp duty is not required. This is because there is no purchase involved.

4. Traders get Dividend: Another advantage for traders involved in this trading is that time to time they earn relevant dividends as well. This is possible only when you hold CFD position in an organisation at the time of the dividend pay out. When the stock of the product or the company will rise, the traders involved will also get benefits from it. With this principle, CFD gives trader an opportunity to earn dividend.

5. Interest gets credited: Brokerage firm pays interest to the trader on the money tied up in short position CFD.

6. Short shares ability: If traders are able to predict the movement of the shares i.e. that the share’s value will go down and the same thing happens, traders earn money. It is simple In case of CFD as in this situation; the trader has not actually purchased any shares. The trader earns money even when the share’s value goes down as they predicted something and it actually happened.

7. After hour facility: There are several CFD companies that allow its traders to actually purchase Contract for Difference even after the time is over. This plays a very important role for people who are in this trading for second source of income.

Day Trading CFDs

Total Trader — Wed, 03 Feb 2010 06:05:56 +0000

Discover how you can generate the highest returns over the shortest timeframe when Day Trading CFDs.

Today we’ll be looking at several ways to identify the best time frame for you when trading CFDs.

Uncover the secrets to finding your best time frame

Using Multiple time frames when doing your charting analysis is going to be essential to your success as a Day Trader. Maximising your entry will stem from using a short, medium and long term chart to focus on the best entry on your time frame.

As an example you may trade a 15 minute chart, so use a daily chart, 4 hourly chart and then the 15 minute to time your entry. Your challenge initially is to find the 3 charting timeframes that consistently locate winning trades.

How big will your CFD wins be?

The next major component is determining how big your wins need to be compared to your losses and this is referred to as your risk:reward ratio. CFD Day Traders normally have similar size wins to losses and traders need to be careful if the average size of a loss is greater than their wins. In order to be profitable you will need to ensure your percentage win rate is well over 60%.

What you need to concentrate on when Day Trading CFDs

A huge challenge for short term traders is overtrading. Many CFD Day Traders feel the need to be active even when opportunities do not line up offering the best risk:reward. By focusing your efforts on a risk reward ratio of 1.5 to 1 or even 2 to 1 you can build a brilliant edge in the markets that will definitely reward your efforts.

Overtrading is the fastest way to the poor house so avoid this detrimental activity at all costs.

CFD Broker -Direct Market Access

Total Trader — Mon, 01 Feb 2010 00:45:12 +0000

Top 3 Reasons to Use a Direct Market Access Broker When Day Trading CFDs

Day Trading CFDs requires a fast platform, the ability to execute your orders quickly and no requotes, especially if you are going to make any money. Today we are going to take a look at the top 3 reasons why you would want to use a Direct Market Access (DMA) CFD broker in order to day trade the markets.

1. No requotes

Since the introduction of Contracts for Difference around the world the Market Maker model has been dominating and one of the greatest frustrations of all traders is the annoying requotes that you get regularly. A requote is when you want to buy at say $2.40 but the CFD broker comes back and says ‘Sorry, that price isn’t available, would you like to deal at $2.42? Now you might be running a direction from the ASX and you can see there is volume there buy your Market Maker CFD broker won’t let you have it. This is incredibly annoying.

When you deal through a Direct Market Access CFD broker you never get any requotes as you are dealing straight into the liquidity of that local exchange. So when you go to buy at $2.40 and the volume is there then that is the price you get. Plain and simple.

2. Speed of getting orders set in the market

Another vital criteria when placing Day Trades online is the ability to execute quickly. Every second can mean a good deal of money, either won or lost, and can make the difference between a winning or losing trade. In order to ensure speed into the market you want to be using a Direct Market Access broker as they have what is known as ‘Straight Through Processing’ or STP which means you orders go direct into the market, not through a broking desk. These valuable seconds are critical to your success as an online day trader.

3. Transparency

Lastly you want to be able to see exactly what is going on and this is what we refer to as transparency. With a DMA CFD broker you can see exactly what is available in the market on both the buy and sell side and you can trust those figures to be real. That means when you want to buy 2,000 CFDs and there are 2,000 available, then you are able to get them, providing no-one else hits that price at the same time. You have the option of seeing all the individual buy and sell orders and you can see your order moving up and down the ASX queue too.

CFD Trading vs Traditional Share Dealing

Total Trader — Wed, 27 Jan 2010 03:36:55 +0000

Many investment groups and hedge funds have found a great deal of success with CFDs for more than ten years in the ASX stock market as an alternative means of investment to traditional share trading.

If, for example, the margin on a Stock you are interested in was 10%, establishing a position of $100,000 would only require a deposit of $10,000. Any running profits that you make can actually be used as margin to esablish new positions but any losses would require extra funds.

While stamp duty on shares has in the opinion of some traders reduced the cost effectiveness of ‘day-trading’ traditional stocks and shares, CFDs are exempt and this seems to have added to their appeal. CFDs are liable to capital gains tax but losses can be offset against future profits for the purposes of tax. In the same way that you would buy shares, when you trade in CFDs the contract purchase is the same.. So if you wanted exposure to 1,000 shares in a company, youd have to sell 1,000 contracts .

With CFDs the charges and commissions involved in a trade are not part of the spread, because of this, the CFD spread quote will be very close to the underlying price of the share or commodity that you are following. CFD’s also mimic almost every aspect of actually owning the underlying share or market, so if you hold a position long enough, you receive the benefit of any dividends being paid on the underlying shares.

CFDs will appeal to different trading styles. It’s important to note that they should not be regarded as substitutes for long term investment or saving, as more citizen try to take control of their financial destiny, theres been a growing realisation that going short is a legitimate means of trading in market.

Trade Futures With CFDs

Total Trader — Wed, 27 Jan 2010 01:28:25 +0000

Contracts for difference or CFD trading is a type of trading where traders can trade on a short term basis and get some profits out of it. CFDs profits or loss normally arise from the disparity in the charge of the future when and at the end of the buying period. Hence, the outcome depends on the performance of a share in the market. This is usually a contract between two people and depending on the position you have taken, you can either gain or lose. When trading CFDs you have two options in that you can trade long or short. Trading long means that you anticipate the prices will rise while trading short is when you expect the prices to fall.

When you decide to trade CFDs, you have to give a certain amount of money as commission for the trade. The commission normally depends on the value of the asset in question since it is a percentage of the value of the asset. CFD trading accounts give the advantage of being able to trade day and night. These trading accounts come with different features which make it very important for any trader to compare Cfds trading accounts to find the most efficient.

One way to compare CFD trading accounts is to look at the commissions involved when buying and selling. The other is to find any other underlying fees you may be required to pay for all your trades if any. You can also compare Contracts for difference trading accounts based on whether it is possible to trade on other investment options apart from futures and whether the account provides all the tools you will need in the trading process. The one thing that should give you more reason to trade Cfd is the fact that you get all advantages associated with leveraging.

Brokerage On Index CFDs – How Do CFD Brokers Make Their Money?

Total Trader — Wed, 30 Dec 2009 02:54:04 +0000

What is US Dollar Index. When anyone starts trading financial products for the first time, the trading costs involved are one of the most important criteria to consider. That is what makes trading index CFDs such a great product as they are generally commission free.

So the question most people ask is how can CFD brokers allow people to trade index CFDs commission free?

The reason CFD brokers allow you to trade index CFDs commission free is the fact that they have a spread on the index that you are trading. The spread is the difference between the first buyer and the first seller.

If we were to have a look at the Aussie 200 index for example the spread may be two or three points. The first buyer might be at 4000 and the first seller at 4002. As you can see there is a two point spread and so if we traded at one dollar per point then buying at 4002 and selling at 4000 would result in a two dollar loss. That two dollar loss is in effect your brokerage.

Trading Index CFDs

So as you can see there is no commission when trading an index CFD as in this example, but you will notice that if you got in and out when the market had not moved you would suffer a $2 loss. So whilst you may consider that you are getting the product commission free you are in effect being charged a small amount of brokerage. The great thing about this product is that the spread on an index CFD is usually kept to a minimum.

Free brokerage or $100 round trip?

There is no doubt that when you first starting out an index CFD at $1 per point is a brilliant option to consider. However, you can begin to see if you traded 25 contracts at 2 point spread your effective brokerage would be $50 to buy and $50 to sell making it a $100 round-trip.

Given the recent volatility of the Australian market and worldwide markets it becomes easy to see why one dollar per point is a very viable option. Even on the Australian market, which may move 100 points a day, at $1 per point you could be making or losing $100 a day.

Beware excessive overnight financing charges

The other reason CFD brokers are able to provide an index CFD commission free is that they charge an overnight financing rate which may be as high as the RBA rate plus or minus 4%. This means if you are holding an index CFD trade for a year you would be charged 4.25% +4% which equals 8.25% per annum calculated back as a daily rate. Always keep in mind that this financing rate is charged on your total position size which means it can get quite expensive allowing the CFD broker to pocket that finance. Find more information about Forex News Straddling Strategy here.

Do CFDs Suck?

Total Trader — Wed, 30 Dec 2009 02:50:03 +0000

Many novice traders blame CFDs for their losses and even may say CFDs suck. Losing money can trigger an emotional response and novice traders may blame someone else for losing money.

Losing money is not due to the use of CFDs (Contracts for Difference) it is the decisions that the trader made. It is very important as a trader that you take responsibility for your actions, both win and lose.

Leverage Is A Double Edged Sword

CFDs trade on leverage where a small amount of money down gives you access to a large position. This can result in very quick gains or losses as the market moves. If you lose money trading CFDs do not blame CFDs and say that CFDs suck.

Using stops on every trade is an important part of your risk management. If you do not use stops then you may not be ready to become a CFD trader.

CFD Brokers Deliberately Hit Your Stops

Some traders think CFDs suck because the broker knows where your stop sits and can then move the price to these levels. After hitting your stop the market then turns around and moves again in the direction you expected. Despite being correct you end up losing money.

CFD brokers are not inclined to chase your stops as they have other more important things to do. Sometimes a trade will hit my stop and reverse and at other times it will move very close to the stop and reverse. It can go either way. Place your stops thoughtfully and in a place where they will not be hit by normal movement.

All the traders in the market create the price movement and you are giving a CFD broker too much credit if you think they can move the market. Accept that you will be stopped out at times even if you have placed your stop correctly.

Re-quotes Rip Off Traders

It is possible to think that CFDs suck because you are re quoted a higher price when you try to buy CFDs through a market maker. Re-quotes are not a rip off they are used because the quantity you wish to trade can not be traded at the price level you specified. There is simply not enough volume in the underlying market.

The difference between the re-quote and the price you placed your order at is called slippage. This is accepted when buying stock as you may execute some of your order at one price and some at a higher price where there is sufficient volume. Your average price is then higher than your original order.

A market maker can only execute the whole order or none of it, partial fills are not possible, so a re-quote is provided at a price level that allows them to execute the complete order. Re-quotes are not about ripping traders off, but just reflect the underlying execution of the order.

Trading Is Your Responsibility

It is never the trading instrument that is the cause of bad performance it ultimately is the trader. There is no point in blaming the market, the broker, your partner or CFDs it comes down to your decisions.

A trader must take responsibility for his or her results and with this belief system in place it is possible for the trader to change their outcomes. If you think the rest of the world is driving you crazy, you will have to send the rest of the world to a psychiatrist for you to get better.

Source: Jeff Cartridge

Stock Vs CFDs

Total Trader — Tue, 29 Dec 2009 01:18:02 +0000

Which is better to trade CFDs or stocks? The answer to this question is not obvious and it will depend on what you want to get from trading. Looking at CFDs vs Stock we will highlight the key differences.

Cash, All or Nothing

When trading stock you require 100% of the cash to buy the stock. It is possible to borrow some of this money to invest using a margin loan, but you will still be required to provide at least 30% – 40% of the amount of stock you are purchasing.

CFDs require only a small amount of cash up front to buy stock, as little as 3%. The profit potential from CFD trading is much larger than stocks with returns of up to 15 times possible.

When it comes to making the most of your capital CFDs win easily against stocks.

What Happens When It Doesn’t Work?

The other side of leverage is risk as leverage amplifies both gains and losses. The most you can lose when investing in stocks is 100% of your capital, assuming you have not borrowed any money to invest.

It is possible to lose more than 100% of the money you invested in the first place with CFDs, so risk management is very important.

While it is possible to manage your risk when trading CFDs in the battle of CFDs vs Stock the lack of leverage when trading stock makes risk management much easier with stock.

The Cost of Doing Business

Brokerage and interest charges are the two main costs of trading when looking at CFDs vs stock.

CFDs are more expensive than stocks when you consider finance charges, because there is no interest charged on stock.

It will depend on the balance between higher interest costs and lower CFD brokerage costs as to which is cheaper CFDs vs stock. The longer a position is held the advantage will swing in favour of the stock holder.

No Tax, Is That Possible?

One of the reasons that CFDs were originally developed was to get around stamp duty that was payable on stock purchases. CFDs were exempt from stamp duty.

Australian traders will notice a difference between CFDs vs Stock when it comes to tax. There are no franking credits attached to CFDs and the 12 month capital gain discount also does not apply. There are tax advantages to stocks in Australia.

Tax advantages vary dramatically from country to country so it is hard to call a definitive ruling here in the battle of CFDs vs stock.

CFDs vs Stock, The Winner Is

In conclusion in the battle of CFDs vs stock there is no clear winner, it will depend on what is most important to you. CFDs offer more upside potential with less capital investment due to the leverage available. The risk associated with CFDs is higher because of the same leverage, so managing risk is more important to the CFD trader than the stock trader.

CFDs can be cheaper with low transaction costs and work well for the active trader. If you wish to hold a position for months or more then stock has an advantage as there is no interest cost to pay. I personally prefer CFDs as I actively manage my risk and CFDs provide access to bigger upside.

Source: Jeff Cartridge

CFD Trading Introduction

Total Trader — Thu, 24 Dec 2009 03:00:04 +0000

What is CFD?

CFD is the Contract for Difference that is traded, from which, person profits from the changes in prices of shares, indices, commodities, currencies etc. in market.

If person bought CFD on the share, which is $4.00 and price goes up to $4.40, then that person makes the profit. Thus, in case 500 CFDs were bought, then person will make $200.

And profiting from increasing markets CFD trader will as well profit from the falling market that is known as the “Short Selling”.

CFD’s are also traded on the leverage & are famous for this cause. Leverage CFD generates in stock market is 10:1 that means CFD trader will profit very fast without any need to buy & own shares. It as well means trader will profit from smaller rises or else falls in market because of this leverage.

Even if though you are a normal person you will learn CFD Trading by the different courses, which are accessible and make substantial revenue in case you learn system & become very good at the CFD trading.

Benefits of CFD Trading

Leverage

Leverage increases profitability of the trader’s potential investment by 10:1

Short Selling

Also profiting from rising market, and CFD trading allows trader to gain from falling market

Shorter Trade Times

Leverage of CFD allows CFD trader to make some profits from small movements in a market. It means CFD trading will take place over some days to weeks instead having to own share for years on end in order to make the descent return.

Capability to Set-up Stop Losses

Stop loss is an ability to set predetermined level to minimize CFD traders losses. For example, if CFD was bought at around $42 and trader is worried it may go down, stop loss can be placed at, $41.50 so that in case it trades at that stage trader can automatically sell out the position prior to it goes lower.

Trade in Evenings

Lots of CFD traders have got day jobs, and checking share during day is impossible. The CFD suppliers allow traders to put trades in evening when market is closed. With “if done” stop loss order, CFD trader will not need to look at market during day. This choice is fast as well as makes it simple to profit by using a CFD advantage on every day basis.

Markets

With contracts for difference you have a huge range of markets starting with share markets (including American, European and Asian market), commodities, currencies, indices, interest rates and much more. Just one broker gives you access to all those markets. Besides you can also trade futures or spots.

No Stamp Duty

When buying shares in the UK you have to pay 0.5% stamp duty on every transaction (no need to pay stamp duty when you sell shares). With CFD you do not pay stamp duty as contracts for difference are derived product and thus you do not buy actual shares.

Trade Futures with CFDs

Total Trader — Wed, 23 Dec 2009 02:28:17 +0000

Futures trading involves people making contracts where the payments for the commodity involved are to be made in the future at a specific time. Usually, the buyer and seller know the value of the asset and both of them agree when the exchange is to be done. Futures trading with CFDs is where the buyer does not have to completely buy and own the commodity. This way, you do not have any rights over the shares or commodities for which you trade.

Contracts for difference or CFD trading is a type of trading where traders can trade on a short term basis and get some profits out of it. CFD profits or loss normally arise from the difference in the price of the future when and at the end of the buying period. Hence, the outcome depends on the performance of a share in the market. This is usually a contract between two people and depending on the position you have taken, you can either gain or lose. With CFD trading, you have two options in that you can trade long or short. Trading long means that you anticipate the prices will rise while trading short is when you expect the prices to fall.

When you decide to trade CFDs, you have to pay a certain amount of money as commission for the trade. The commission normally depends on the value of the asset in question since it is a percentage of the value of the asset. CFD trading accounts are offered by a number of companies and most of them give the advantage of being able to trade day and night. Thus, traders can access the market during the night and find contracts. These trading accounts come with different features which make it vital for any trader to compare CFD trading accounts to find the most efficient.

Many traders who use CFD trading accounts normally want to get all the benefits of trading futures without the need to own them. Perhaps the good thing with trading CFDs is the fact that you can control losses easily. This is because you can exit from trading anytime when you feel the prospects of gaining are slim. Anyone can trade CFDs since they are not complex and the costs involved are minimal.

One way to compare CFD trading accounts is to look at the commissions involved when buying and selling. The other is to find any other underlying fees you may be required to pay for all your trades if any. You can also compare CFD trading accounts based on whether it is possible to trade on other investment options apart from futures and whether the account provides all the tools you will need in the trading process. The one thing that should give you more reason to trade CFDs is the fact that you get all advantages associated with leveraging. This type of futures trading is quite common nowadays and this is because of the many advantages it provides.

Compare CFD Brokers And CFD Providers

Eden — Sat, 12 Dec 2009 02:26:04 +0000

When it comes to CFD trading, a CFD broker or provider is a person who works through online, uses electronics CFD platforms that makes CFD trading mobile and will help you to develop your trading routine within a shorter period of time. It is wise to compare CFD providers before joining.

Unless you have any enquiry or need assistance with a particular order there is no need to directly communicate with the broker. A full service CFD broker would provide you more information than the cut-price online CFD brokers. Now, here we will see how to select a CFD broker or trader. One way to learn about CFD brokers is by asking an experienced trader if you know someone or met while doing a CFD trading tutorial course. Regardless of which CFD broker you choose to trade with, consider the following factors to make sure that they are well established in their profession they are offering you the features that you are looking for. A good way to have some idea about the CFD providers is by trying out a demo account with them to test their trading platform.

Online CFD Brokers: Things you Should Compare

Margin Requirement

Usually CFD brokers come up with margin requirement that remains within 5-20%. Many providers keep it at 10%, thus offers around 10 to 1 leverage. However, depending on the turnover of a particular CFD, some CFDs require a margin around 20-70%.

Broker’s Commission

The commission depends on the CFD provider. Usually it remains within 0.1 to 0.2% of the size of your trade each way with a minimum commission of around $10-25. However, these commissions are negotiable especially if you are a regular CFD trader. So always ask the broker about it.

Information regarding CFDs

When it comes to choosing a broker, it is important that you take necessary notes regarding their CFD offerings. In general, it is important that you have access to a large number of CFDs when you are using trading systems that are designed to be traded on for instance, the top 200 or 300 CFDs, than if they are programmed to execute trade on the top 30 or 100 only.

If you are trading a system that is designed for a certain amount of CFDs to generate profits then you need to make sure that the number of CFDs that are available is sufficient, or else you may have to redesign your system. You can backtest your system with the current list of CFDs that are provided by the broker that you are interested to trade with. This will help you to develop a system that is more applicable in real life scenario.

Types of CFD Orders

There are many online CFD brokers available who offers the opportunity to the traders to place their orders after the market time is over. So, if are working at office during the day time and willing to place orders during the evening or at night then this is something you need to look for in the offerings of a CFD provider.

However, some brokers might require you to place the orders while the market is open. This depends on your trading strategy and system.

Avoiding CFD Risks, The Path To Trading Success

Total Trader — Fri, 11 Dec 2009 01:56:34 +0000

The main CFD risks is the impact of leverage when trading CFDs. With leverage available up to 20:1 you can make a lot of money very quickly and also lose a lot of money very quickly.

Stops Can Control Your Risk

Stops work very well to limit your CFD risk. Place your stop at a price that will control the loss per contract to an acceptable level. This is an effective way to manage your risk.

A stop loss will exit you from a trade with a predetermined loss on the trade. Without a stop the loss could be much larger. If you entered a trade at $12.50 and placed your stop at $12.10 your loss on one contract is set at 40 cents.

Too Big, You Loose

with 30 cents at risk the number of contracts will determine your gain or loss. 100 contracts would give a loss of $30, 200 contracts would lose $60 and 1000 contracts would lose $300. Bigger positions, say 10,000 contracts would lose $3,000. Correct position sizing is an important aspect of controlling CFD risk.

A Gap Away From Disaster

A stop does not cover you against all CFD risks. It is possible for a share to gap over the stop resulting in a larger than expected loss. Your stop may have been placed 40 cents form your entry, but the share never traded at that price, instead jumping over your order to create a bigger loss of 60 cents. There are a few techniques you can use to minimise the impact of gaps.

Control your position size

Most Destructive CFD Risk

The biggest risk when trading CFDs is however not related to stops or position sizing, it is instead you. Controlling your own emotions is vitally important to prevent placing a position that is too big or to move stops to prevent you losing money. If you follow either of these strategies you will inevitably lose.

Managing your risk is the key to your success and profiting from CFDs.

Aspects of CFD trading

Total Trader — Thu, 10 Dec 2009 03:30:24 +0000

It has been mentioned that CFD trading is very similar to share trading, and in most respects the two are almost the same. CFDs, however, have distinct features that differentiate them and make them attractive to traders and investors alike.

These features include:

Leverage

In the financial market, leverage means the use of borrowed money to put into investment products such as property, shares, property trusts or managed funds. A common example of using leverage is people borrowing money (from a bank or financial institution) to invest in a residential or investment property. This results in a mortgage for a home loan or an investment loan. People may also borrow money to buy shares. This is commonly known as taking a margin loan to invest in a share portfolio.

Trading CFDs is similar to taking a margin loan because when you trade a CFD you are paying only a small portion or percentage of the total value upfront in the form of a margin payment. The full amount is loaned to you by the CFD provider. It is this full amount upon which your financing charges will be calculated. Margin trading means that you only need a small percentage of your trading capital to open up larger or more positions than you could normally open if you were trading shares.

Some CFDs require as little at 5% margin, some 10% and others 20% or more, depending on the CFD. For many investors and traders, being able to trade on margin (using leverage) is the biggest attraction of CFDs, as it increases the opportunity to profit while using less capital.

Nevertheless, the ability to trade on margin can be a double-edged sword, in that it both magnifies potential profit and losses. When used wisely and appropriately, however, trading on margin can be a big boost to profitability and capital building.

Flexibility

Two of the more attractive elements of CFDs are cheap commission and low margins. But that’s not the whole picture. You shouldn’t forget about the tremendous flexibility they offer. Flexibility is what allows you to keep making money no matter what market conditions are like.

One of the key features of share CFDs is the ability to trade on both the long side and the short side of the market.

Short selling occurs when your opening trade is a sell order. If the price of the share falls and you close the position (with a buy order), your profit is the difference between the two. As you can see, this enables you to benefit directly from a falling share price.

While not always the case, traders generally will not want to have their trading portfolio either entirely long or entirely short. If you structure your trading portfolio this way, the day-to-day oscillations of the market can have a marked impact on the value of your portfolio. While it is easy to talk about portfolio volatility, it becomes more of an issue when you have real capital invested.

You’ll probably find there are long and short opportunities regardless of the prevailing market conditions.

Naturally, in a bear market there will be more opportunities on the short side than on the long side, but it’s best not to focus exclusively in that direction. Even though the market has been consistently bearish for some time, if you were too heavily short at the wrong time you could easily have suffered some significant draw downs due to bear market rallies that have occurred.

To illustrate this it’s worth considering some statistics. In 2008, the ASX/200 index fell by 41.29% – which we can comfortably say is a very strong bear market. However, over this period the index rose on nearly 45% of trading days. What this shows is that being heavily short would probably have been profitable, but the volatility you would have experienced would have been quite high over the course of the year.

This is where a difference can be seen between the short-term trader and the investor:

a. For the investor, the idea of weathering the ups and downs of being in the market is all part and parcel of the business.

b. For the trader, the objective is to try and capture smaller moves of the market and then exit. Timing remains an all-important component of survival for traders.

The conclusion you might draw (and probably should) is that being directionally wrong for even a short time can be expensive.

CFDs can be traded long or short

When you buy a CFD (go long), you’re expecting its price to go up so that you can sell it later at a higher price, for a profit.

When you sell a CFD (go short), you’re expecting its price to go down so that you can buy it back later at a lower price, for a profit.

Being able to trade long or short is one of the most attractive features of CFDs. It means that you can trade long with the aim of making money on a rising market, or trade short looking to make money when the market is falling.

Short selling physical shares is a complex and more costly procedure compared to short selling CFDs. NB Not all instruments can be traded short.

Dividends and corporate actions

For many long-term investors, dividends remain one of the determining factors in whether they invest in a particular share or not. Therefore, dividends can be considered important when deciding which stock to buy.

When you trade share CFDs on dividend-paying shares you will automatically be paid the dividend when you have a long position. The dividend payment is usually reflected on your trading account on the day of its announcement. On the other hand, if you have a short CFD position during the announcement of the dividend, the amount of the dividend will be deducted from your trading account. Other corporate actions such as bonus issues and share splitting are also automatically reflected on your CFD trading account as soon as they’re implemented.

Reporting season

The reporting season refers to the time of year when publicly listed companies update the market about their half yearly and yearly performance. It is also usually the time when companies announce whether their profit forecasts are on target.

Depending on a company’s performance and projected profit, the reporting season can result in volatility within the market. For example, if a company issues a forecast that its earnings will be lower in the next half year, the share price might fall the next day as investors may be disappointed with this result. On the other hand, if a company doubles its income and profit expectation for the coming year, the share price may jump higher as investors and traders take advantage of the good news.

As CFDs mirror the price of the underlying share, movement in share prices during the reporting season will also be reflected in CFD prices. This means that as a trader or investor, you have to be aware of the possible impact of the reporting season on your CFD positions. NB Reporting seasons vary from market to market.

Product trading times

The advent of the internet and online trading means that traders and investors now have access to international markets almost 24 hours a day and not only during market hours in Australia.

Another aspect of CFD trading involves the expiry date or length of holding time. Unlike other derivatives that have expiry dates and become worthless upon expiration, CFDs don’t have an expiry date. This means you can hold CFDs for as long or as short a period as you like.

Short-term traders may trade CFDs for a few days, while medium- to long-term investors and traders may trade them over a few weeks or months.

Lower brokerage costs

Compared to the brokerage fees payable when you trade with a regular stock, commission charges when trading CFDs are relatively low.

Instead Of Stocks, Trade A CFD

Total Trader — Wed, 09 Dec 2009 02:04:45 +0000

The difference between where a trade is entered and exited is the contract for difference (CFD). A CFD is a tradable instrument that mirrors the movements of the asset underlying it. It allows for profits or losses to be realized when the underlying asset moves in relation to the position taken, but the actual underlying asset is never owned. Essentially, it is a contract between the client and the broker. There are several major advantages to trading CFDs, and these have increased the popularity of the instruments over the last several years.

How a CFD Works

If a stock has an ask price of $25.26 and 100 shares are bought at this price, the cost of the transaction is $2,526 cash outlay from the trader. With a CFD broker, often only 10% margin is required so this trade can be entered for a cash outlay of only $252.6.

It should be noted that when a CFD trade is entered, the position will show a loss equal to the size of the spread. So if the spread is five cents with the CFD broker, the stock will need to appreciate five cents in order for the position to be at a breakeven price. If you owned the stock outright, you would be seeing a five cent gain, yet you would have paid a commission and have a larger capital outlay. Herein lies the trade off.

If the underlying stock were to continue to appreciate and the stock reached a bid price of $25.76, the owned stock can be sold for a $50 gain or $50/$1263=3.95% profit.

At the point the underlying stock is at $25.76 the CFD bid price may only be $25.74. Since the trader must exit the CFD trade at the bid price, and the spread in the CFD is likely larger than it is in the actual stock market, a few cents in profit are likely to be given up.

Therefore, the CFD gain is an estimated $48 or $48/$126.30=38% return on investment.

The CFD may also require the trader to buy at a higher initial price, $25.28 for example. Even so, the $46 – $48 is a real profit from the CFD, where as the $50 profit from owning the stock does not account for commissions or other fees. In this case, it is likely the CFD put more money in the trader’s pocket.

The Advantages:

Higher Leverage

CFDs provide much higher leverage than traditional trading. Standard leverage in the CFD market begins as low as a 5% margin requirement. Depending on the underlying asset (shares for example), margin requirements may go up to 50%. Lower margin requirements mean less capital outlay for the trader/investor, and greater potential returns. However, increased leverage can also magnify losses. (For more, see The Leverage Cliff: Watch Your Step.)

Global Market Access from One Platform

Most CFD brokers offer products in all the world’s major markets. This means traders can easily trade any market while that market is open from their broker’s platform.

No Shorting Rules or Borrowing Stock

Certain markets have rules that prohibit shorting at certain times, require the trader to borrow the instrument before shorting or have different margin requirements for shorting as opposed to being long. The CFD market generally does not have short selling rules. An instrument can be shorted at any time, and since there is no ownership of the actual underlying asset, there is no borrowing or shorting costs.

Professional Execution With No Fees

CFD brokers offer many of the same order types as traditional brokers. These include stops, limits and contingent orders such as “One Cancels the Other” and “If Done.” Some brokers even offer guaranteed stops. Brokers that guarantee stops either charge a fee for this service or attain revenue in some other way.

There are very few, if any, fees for trading a CFD. Many brokers do not charge commissions or fees of any kind to enter or exit a trade. Rather, the broker makes money by making the trader pay the spread – to buy, a trader must pay the ask price, and to sell/short, the trader must take the bid price. Depending on the volatility of the underlying asset, this spread may be small or large although it is almost always a fixed spread.

No Day Trading Requirements

Certain markets require minimum amounts of capital in order to day trade, or place limits on the amount of day trades that can be made within certain accounts. The CFD market is not bound by these restrictions, and traders can day trade if they wish. Accounts can often be opened for as little as $1,000, although $2,000 and $5,000 are also common minimum deposits requirements.

Variety of Trading Options

There are stock, index and commodity CFDs; even sector CFDs have emerged. Thus not only stock traders benefit; traders of many different financial vehicles can look to the CFD as an alternative.

The Disadvantages

While CFDs appear attractive, they also present some potential pitfalls. For one, having to pay the spread on entries and exits eliminates the potential to profit from small moves. The spread will also decrease winning trades by a small amount (over the actual stock) and will increase losses by a small amount (over the actual stock). So while stocks expose the trader to fees, more regulation, commissions and higher capital requirements, the CFD market has its own way of trimming traders’ profits by way of larger spreads.

The Bottom Line

There are many advantages to CFD trading including lower margin requirements, easy access to global markets, no shorting or day trading rules and little or no fees. However, high leverage magnifies losses when they occur, and having to continually pay a spread to enter and exit positions can be costly when large price movements do not occur. CFDs provide an excellent alternative for certain types of trades or traders, such as short and long-term investors, but each individual must weigh the costs and benefits and proceed according to what works best within their trading plan.

Source:Cory Mitchell

High Probability Trading Strategies Using CFDs

Total Trader — Tue, 08 Dec 2009 04:23:53 +0000

High probability trading strategies for CFDs are highly desirable. These strategies are easier to trade because they provide more winning trades.

The impact of leverage is not as great as these strategies are less likely to have losing streaks so the drawdown is reduced.

High probability trading strategies are not necessarily the right direction to focus on with your research.

Trading Is Not About Being Right

The success of a trading strategy is dependent on two factors, how often the strategy wins and the risk reward of the strategy. It is the combination of these two factors that determines the results, not one of them in isolation.

Consider the following trading strategy that is profitable 95% of the time. The strategy wins $100 on each profitable trade, so from 100 trades the strategy makes $9,500 trades on average. But what happens on the other 5% of the trades.

If the average loss is $2,500 then the strategy loses $12,500 based on 5% of the 100 trades. Even though this strategy is right very often it still loses money. It is not one or the other measure in isolation, it is the combination of win% and the risk reward.

You Will Still Have Losses

The strategy that is often used to get high probability trading strategies is to use wide stop losses and small profit targets. One hot selling product is FAP Turbo, the forex trading robot, that uses this idea to achieve a hit rate of 95%.

All goes well until you experience a series of large losses. The losses can be reduced by tightening the stop loss, but this is very likely to reduce the number of times the strategy wins.

Balancing The Tradeoff

Finding an optimal relationship between the level of the stop loss and the success rate of the strategy requires testing the idea to determine the trade off between risk/reward and success rate.

Testing chart pattern breakouts I found the best trades breakout and keep going. With this entry idea a tight stop can be used to gain better results by giving a higher risk reward. Testing profit targets also gave interesting results improving the win%, but reducing the profitability overall.

Make Money First, Be Right Later

A trend following strategy is right around 30% of the time, but when it does win it wins big, with a risk reward of 3 or more. This is a profitable trading strategy.

A short term scalping strategy that wins 70% of the time with a risk reward of 1:1 is also profitable.

In the pursuit of being right and chasing high probability trading strategies, remember to ensure that trading is about making money, not being right.

Source: Jeff Cartridge

CFD Trading: Going Long – Making a Profit

Total Trader — Fri, 04 Dec 2009 03:46:12 +0000

In this CFD trading example we will be going long and making a profit. Going long means you buy a CFD to open your position with the view of making a profit from the increase in price of the underlying security. You realise the profit by selling at a higher price than the price at which you bought your CFD.

Let’s commence our profitable Share CFD trade example; note that these are all automatically calculated by your CFD provider, the example is used to illustrate the mechanics of your trading accounts’ inner workings.

Let’s say you’ve got $10,000 in your trading account with no current open positions. You spot a trading opportunity for a CFD for XYD Widgets Company and you decide to enter in the trade.

The XYD CFD is quoted at 30.00/30.02 (bid price/ask price). You decide to buy 2,000 XYD Share CFDs at the offer price of $30.00. At this point your broker may have fees deducted from the trade: let’s say the broker’s commission is at 0.1% of the trade so: 2,000 Share CFDs x $30 x 0.1% = $60 commission.

Your trading account is currently at $10,000 – $60 = $9,940. Your margin requirement for holding the CFD position currently stands at: 2,000 CFDs x $30 x 10% (say XYD has a 10% margin requirement by your CFD broker) = $6,000. Therefore your total margin requirement for holding XYD CFD is $6,000. And therefore your total free equity in your account is: $9,940 – $6,000 = $3,940. (Free Equity which is available for you to trade with minus margin requirements).

You hold the position overnight and the next day you are charged with a financing fee: (Number of CFDs held * Closing price * Financing Rate / 365). Your account finished the day at $9,940. The financing charge is: (2,000 x $30) x 5% / 365 = $8.22.

Before we complete the calculation – say the share price gapped at opening to $31.00/01 you would have earned some profit: ($31-$30) x 2,000 = $2,000. Therefore your CFD Trading account now stands at $9,940 – $8.22 + $2,000 = $11,931. At this point you can also calculate your margin requirements and your total free equity.

Later that afternoon you decide to exit your CFD trade and you close off you position by selling your XYD Share CFDs at the bid price of $31.00.

We will now calculate your total equity. When you close a position you have a 0.1% commission to pay: 2,000 CFDs x $31.00 CFD price x 0.1% commission = $62.

After you sell your position you are no longer bound by any margin requirements. Once you have completed your trade, your CFD trading account will now have: $11,931 – $62 = $11,869. Total profit from the single long Share CFD trade after all the fees and charges is $11,869 – $10,000 = $1,869.

Introduction to Day Trading CFDs

Total Trader — Thu, 03 Dec 2009 03:23:24 +0000

So if you are planning to go for CFD day trading rather than trading through long term CFD positions then this article will provide you the introduction that might help you to determine whether CFD day trading is going to be suitable for you or not. You will find out a few of the benefits and also the downside of focusing on intraday trading of CFDs.

Introducing the benefits of Day Trading CFDs

Now there are several benefits of Day trading CFDs. This includes:

1.It doesn’t involve any overnight risk. This means you don’t expose yourself to the risk of a stock or share and hence the CFD gapping up or down overnight. If the gapping happens against you, then there is a scope for you to exit at a position at a higher price than your intended exit.

2.There is no interest cost. If you trade the CFD within the day and don’t rollover your trade to the next day, you don’t incur any interest costs.

3.You can get short term results from CFD day trading. Since you are in the position for a shorter period of time, you can easily rely on short term cash flow if you want to.

Downside to Day Trading CFDs

However, CFD day trading does have some difficulties as well. These are:

1.You will need to trade shorter time frames. Means you need to monitor the screen at a regular basis. The process is usually more time consuming.

2.It is important to have a very good idea about your system since you will have to make quick decisions about your trades.

3.Typically will catch smaller moves. So in order to make larger amount of cash, it is necessary to go for bigger float or use more leverage.

Now after going through all these factors, if you think day trading will suit you, then consider attending a day trading course with an experienced trader who uses price action and indicators to establish a strong trading system. CFD day trading might look more exciting if you enjoy looking at the movement of the stock prices and if you can effort the extra time trading. Day trading is simply another time frame.

How Much Margin Do I Need in My CFD Trading Account?

Total Trader — Wed, 02 Dec 2009 03:33:01 +0000

When trading CFDs, your CFD broker requires you to have a certain amount of cash equity in your CFD trading account. When you open a CFD position, your trading account must have enough cash to fund their margin requirements. Your CFD provider’s margin requirements are typically listed on their website or in their Product Disclosure Statement.

The mathematical equation for calculating your margin requirements is: Margin Percentage x (Contract Quantity x CFD Price) = Margin Requirement. For example, your margin requirements when opening a long position for Telstra (TLS) for 1,000 Share CFDs at $3 with a margin of 10% would be: 10% x (1,000 x $3) = $300. $300 would be your margin required.

Your margin requirement for your CFD position is a dynamic number. As the price of the underlying security fluctuates, your margin will also change.

CFD Trading Platform Checklist

Total Trader — Tue, 01 Dec 2009 03:08:15 +0000

Now there are few things that you need to look for in a CFD trading platform that is offered by a broker.

1.Check out whether it allows you to place limit or stop orders to go in a CFD position in the evenings

To enter a CFD position next morning, you may want to place an order in the evening. This is helpful for those people who works during the day time do their trading in the evening. These orders to enter a CFD are typically done with limit orders. Some providers will allow you to stop entry orders too.

In case of the limit orders, it is important that you check that they be placed on either side of the market. For instance, a CFD trader may feel interested to place a limit order for buying at a limit price of $5.50. This is above the latest closing price of say $5.30. If the market trades at $5.50 in the following morning or below that, he or she will enter the position. It is a method of placing an order to assist to ensure you enter the position, unless the price gaps up the next morning above the limit price of $5.50. So, if you trade the system following this strategy, Make sure that you can place them in the evening and can them at a limit price which is above the last trade price.

2.See if the market orders are available both during and out of the market hours

You find some CFD providers’ CFD trading platform who will allow you to place order during a time when the market is closed so that you can enter a position at the opening price when the market opens. This can be done by a “market order” when the market is closed. It is also termed as “enter at open” in some platforms. Some brokers will allow you to enter a CFD only when the market is open. In such cases, you will have to monitor the market while it is open. However, the time depends on the location of the market. If you are trading overseas, then the market hours can be in the afternoon or night instead of in the morning.

3.See if you can place stop orders for entering a position

Stop loss orders are used in trading systems to enter a trade which are termed as “stop entry orders”. This means, if you place a stop buy order at $5.50, and then you would enter the position when the stock trades at or above $5.50. Some trading systems allow the trader to execute their trades in the evening. This is very much suitable for those people who have to attend their work place in the day time. You need to check out whether the platform is restricted for only market hour trading.

4.See how the stop loss order is placed for your trading

One of the greatest benefits of CFD trading is it allows a person to place stop loss orders that works automatically. When choosing a CFD provider, check out the details of order placement for stop losses. The trading system that you are using will determine the type of stop loss order. For instance:

a) Are you allowed to place an “if done” stop loss order that is linked to a awaiting order to enter a CFD?

If the answer is yes then you can place your order to enter the CFD, and its stop loss at the same time every day. People who work during the day time find this very much helpful since this allows them to execute all their trades in the evening. There are two kind of “if done” stop loss available:

One is that you can specify the stop loss at a particular price if you are using a limit order to enter a CFD. And the other one is if you are going for a “enter on open” type of order, can specify stop loss at a particular distance from the entry price, regardless of the entry price. What you can or cannot do will depend on the provider. So before choosing a broker, have a look at their website and if you need more details then contact with them for more information.

b) See whether there is any limitation or restriction for placing stop losses based on how far the stop loss can be from the entry price. Some providers will allow you to trade without such limitations where some might require you to maintain a minimum distance.

c) You need to keep one thing in mind, when you are going for placing market order in the day time; normally it will require you to place the stop loss right after entering the trade. So in that case, the above mentioned points won’t be applicable for you apart from checking how far from the current price spread you can place your stop loss order.

5.Have a closer look at the charts

Some CFD traders would prefer to use the charts on the platforms that the brokers come up with in order to modify their own entries. This is more useful in case of day trading. On the other hand, many traders go for systems that don’t require them to be there at all when the market is open. Charts are not used in such cases. However, in order to have a clear idea about the market condition, it is necessary to have an effective chart for assistance.

6.Check out the account management log book

While choosing a trading platform, it is important that you take a look at the account management log book of the platform where you will keep track of your account, your profits and losses from trades along with the costs of trading such as commissions and interest charges or payments. This should be quite clear and easy to understand. When it comes to CFD trading, choosing the right platform is as important as selecting a reliable and efficient broker. You can practice placing orders through different provider’s demo CFD accounts and trading platforms before starting you career as a trader.

Tips for CFD Trading

Total Trader — Mon, 30 Nov 2009 03:39:26 +0000

CFD trading is very much similar to doing business. This should not be seen as gambling unless you have too much money in your pockets that you are not worried about losing. However, due to leverage, there is a chance of losing more than your actual cash float in case you are not using stop loss properly and don’t have well structured money management rules. Share price going down to zero for some reason can also be a reason behind the loss. So it is important that you treat it as a method activity where you use a trading system to generate profit form your trades.

Before starting your trading career, go through proper training to learn how to trade the right trading system. In order to execute your trades properly, you need to increase your level of knowledge and do some practice as well to design or learn using a good system.

You need to keep one thing in mind; all trading systems come across both winning and losing trades. The most important thing to make profits overall is trading a profitable trading system. In your early days in CFD trading, there is a good possibility that you will face some losing trades. However, despite the fact that number of losing trades is often more than the number of winning trades, the size of the winners are considerably larger than the losers. In order to survive in the market, you need to have a clear idea about the mechanism of your system.

Make up your mind whether you want to learn a systematic trading system or want to go for a discretionary one. You will find courses for both of them. In case of part discretionary systems, you need to do some paper trading in order to prove that you are good enough to trade that system profitably. Someone performing well with that system does not necessarily means you will do the same with it.

On the other hand, systematic trading systems are much easier to follow. So you don’t have to spend a whole lot of time on screen trading. You can backtest multiple trading systems and select the one that performs best. However, keep in mind that its high performance on the past results is not going guarantee good result for future trades.

As a trader, you need to put a lot of emphasise on risk and money management. Despite this should be a part of your backtesting procedure, surprisingly many people ignore its importance and may proceed without having a money management.

In order to measure the performance or effectiveness of a system, you need to look at the yearly profits based on the percentage of your cash float, the maximum historical drawdown (as a percentage of your cash float), the steadiness of returns (consider the size of returns of multiple years) and finally the profit-loss ratio in combination with win-loss ratio.

CFD Trading Mechanics: The Calculations

Total Trader — Fri, 27 Nov 2009 03:40:52 +0000

Lets assume that you bought CFDs when the price was $5.50. Since the trade size that we are working with is $8000, the number of CFDs that was bought would be 8000/5.50 = 1454.

Let’s continue with this CFD tutorial. Now let’s assume that the stop loss was set at $5.25, means that if the price falls to or below the $5.25 mark, we will exit this trade at a loss. Assuming that the trade goes well and that the CFD price of the CFD is now $5.75 and we have trailed the stop up to $5.40. A trailing stop refers to the stop that shifts in the direction of our trade (up for long positions) when the trade goes in our direction. Now if the price goes up to $6.00 and our trailing stop is moved to $5.90 then when the price of the CFD will fall, our stop loss will exit us from the trade at $5.90. The whole trade took about 12 days.

So, the difference between the entry and exit price is: $5.90 – $5.50 = $0.40

From this, we can calculate our gross profit = (difference between entry and exit price) x (number of CFDs) = 1454 x 0.40 = $581

Now that we have our gross profit, it is time to calculate the costs to find out the net profit.

Cost = commission + interest

First we will calculate the commission and then interest.

Assuming that we will have to pay $15 in and $15 out or 0.15% of the size of the trade. The one that is greater is needed to be taken under consideration. Here we will take the first one since this is greater. So, the commission would be $15 + $15 = $30

Also, assume that the interest rate charge for the provider for long positions held overnight is 7% or 0.07 per annum. In order to find out how much this is in case of our trade, we need to make it “pro rata” (times it by the days in trade, then divide by 365), and then will have to multiply it by the size of the trade.

Interest = (interest rate for long position) x (days in trade/365) x (trade size) = 0.07 x 12/365 x 8000 = $18.41

So our net profit is going to be: Gross Profit – (commission + interest) = $581 – (30 + 18.41) = $532.59

So, here goes your first CFD trade with all the calculations. Note that the trade that we have described above is completely hypothetical and not taken from any particular system.

You need to keep in mind that in case of short positions, interest costs are paid to you, not charged, so this will offset the costs rather than contribute in it. The actual figure for interest payment is usually a bit more complex than the way we have illustrated it in this example due to the fact that the interest rate is not calculated from the value of the trade size during the entering or exiting the position but at a daily basis from the value of the trade size at market value. For example, if we consider the interest cost based on our final trading size which is 8532.59, the interest would be $19.63. So you can see there is not much of difference in between. So we can say that the actual interest cost would be within the range of $18 and $19. This is how the CFD trading is executed. Here you have learnt how the leverage works along with the calculation of the costs that are involved in CFD trading.

CFDs Suck, Is This True?

Total Trader — Wed, 25 Nov 2009 09:17:57 +0000

Many novice traders blame CFDs for their losses and even may say CFDs suck. Losing money can trigger an emotional response and novice traders may blame someone else for losing money.

“Leverage Is A Double Edged Sword”

Contracts for Difference (CFDs) are a leveraged product and leverage means that money can be made or lost very rapidly. The fact that a trader lost money using Contracts for Difference (CFDs) does not mean that CFDs suck.

If you do not yet have the discipline to use stops on every trade and to manage your risk, then maybe you are not ready to trade CFDs.

“The Broker Knows Where Your Stop Is”

The market will move where it chooses to and a CFD broker cannot move the markets. It would take enormous amounts of money to do this. Sometimes your stop loss will be triggered, even if you placed it perfectly.

“Re-quotes Are Unfair”

Market makers can re-quote prices if the market moves rapidly from the current price or there is not enough volume at the underlying price to trade a position. New traders often think they are being ripped off and consequently that CFDs suck. You are not being ripped off the market maker is simply quoting you a price at which the whole order can be executed.

Slippage is the difference between what you pay to enter a position and what you wanted to pay. Slippage is an accepted part of buying stock and occurs because there is not sufficient volume at the price you wish to pay. You end up paying a slightly higher price to get the quantity that you want.

“Take Responsibility for Your Trades”

It is wrong to blame CFDs as the cause of bad performance, it is always the trader. Just as blaming the market is futile, saying CFDs suck does not address the underlying cause of the problem.

Basics of CFD Trading

Total Trader — Wed, 25 Nov 2009 03:54:15 +0000

CFD is a contract or agreement between a broker and a trader that works on the opening and closing price of the shares. The word CFD stands for “Contract for Difference”. The basic idea of CFD trading is making profit from changes in the price of stocks and shares.

Let’s take an example to understand the concept more clearly. Let’s say you bought CFD on a stock that is $5.00 and then the price rises to $5.50. If you sell the CFDs now, you will be making a profit worth of $500 minus the costs. You can also go for short selling of CFDs and make profits while the market is falling.

CFD trading is done on leverage, which is why it has become such a popular trading product. Usually the leverage is about 10:1. This means through this kind of trading, you can make larger profits with smaller float. However, the trading results are overstated. So if your system is making a certain amount of loss in a year without any leverage then this will be multiplied when you are using leverage.

Advantages of CFD Trading

There are quite a few advantages in choosing to start CFD trading. Among the advantages, you have access to leverage of your trading account, allows easy access to short trades to avail you to more opportunities and also features the usage of stop losses gives you options to protect your trading capital.

CFD’s Mean Leverage

Leverage boosts the profitability of CFD trading up to 20 fold. For instance, in case of 10: 1 leverage, a trader can buy CFDs worth of up to $50,000 with a fund of $5000. Now, if you are trading with a system that generates a certain amount of profit without using leverage then with leverage you will generate a return that is magnified.

CFD Trading Allows for Trading Long and Short

While doing CFD trading, you can go for both long and short trading. How much you will be able to short the CFDs depends on the broker. Some CFD trading brokers will allow you to short a major portion of the CFDs that they will provide on the other hand some will allow you to short a smaller portion. Since in case of short trading you can make profit from both rising and falling stock prices, this trading approach can boost up your profitability significantly with some trading systems. So you can make profit from both bull and bear market.

You can Trade Shorter Time Frames

In case of CFD trading, you can make money from smaller moves in the underlying stock prices due to the opportunity to short CFDs and because of the availability of leverage. You don’t need to hold your positions for a longer period of time to make profit from your trades. For instance, you don’t need to hold onto some stocks for months in order to make profit from trading but instead you can trade systems even when you are in trading for only a few days or weeks. This is why you will notice a smoother and more consistent growth equity curve for your trades.

Usage of Automatic Stop Loss

Another great advantage of CFD trading is it allows you to place automatic stop losses on your trading platforms something that is not available in case of stocks. The main advantages of this particular option are:

First of all this will allow you to close a trade automatically “intraday” rather than looking at the end of the day to find whether the price of the stocks has exceeded your stop loss, before exiting the following day. This helps the system to generate more profit by allowing you to avoid the slippage. Secondly, using automatic stop losses makes it a lot easier for a trader to use a mechanical system since the exit is done automatically. This again will increase your profitability if you are dealing with a profitable trading system.

Time Flexibility

This kind of trading allows a person to execute trades even in the evening. It is almost impossible for people to place trades and exit them in the day time if they are attending to their work place throughout the day. Some CFD providers will provide you the opportunity to place trades in anytime of the day and night. So in the evening when the market is closed, you can still place an order to enter CFD and “if done” stop loss order as well, all at a time. And you don’t even have to keep your eyes on the pc throughout the day for trading. The whole trading routine will take much lesser time.

Types of CFD Trading Orders

Total Trader — Tue, 24 Nov 2009 02:59:13 +0000

CFD Market Order

The CFD market order that refers to buying and selling CFDs as quickly as possible in the best market price that is currently available. In case of some providers, you will be allowed to place market order when the market is closed, and therefore will allow you to get in when the next trading session.

CFD limit order

The order under which you buy the CFDs during a time when the price trades at or below that limit price is called a CFD limit order to buy CFDs at a limit price. On the other hand, the order under which you sell the CFDs during a time when the price trades at or above that limit price is called a CFD limit order to sell CFDs at a limit price.

We use limit orders to enter or exit positions. For example, in order to enter a long CFD position, you can go for placing limit order to buy a CFD if the price trades at an exact price or lower. If you want to place these orders during evening, some platforms may permit you to place limit buy orders in that time at a price that is either beyond or under the last traded price. This means, you will be able to get into the market tomorrow if the CFD trades at or below that price.

However in some other case, you can exit a long CFD position with a limit order to sell CFDs. This is also knows as “take profit” order. Let’s assume that the price is $11.25 right at the moment and you are in the market with a long CFD position. You set a limit sell order at your profit target which is $11.75. Now if the price rises to or exceeds the $11.75 mark, you’ll be exited at your profit target. However, please keep in mind that the figures used here are only for illustration. This is neither a recommendation nor a part of any particular trading system.

CFD stop order

The order under which you buy the CFDs during a time when the price trades at or above that limit price is called a CFD stop order to buy CFDs at a stop price. On the other hand, the order under which you sell the CFDs during a time when the price trades at or below that limit price is called a CFD stop order to sell CFDs at a stop price.

Like limit orders, stop orders are also used for entering or exiting a position. If the trade goes against you, stop orders are usually used as “stop loss” orders to exit you from a trade. For example, assume that you have bought CFDs at a rate of $2.50 and the stop loss order is set at $2.25. Now due to the stop loss order, if the price of the CFDs falls to or below $2.25, you will sell the CFDs and will exit the position.

However, stop orders can be used for entering a position as well. For example, let’s say the current price of a CFD is $7.50 and you placed a stop buy order at $7.80. Now you will be taken into the market if the price rises up to and above $7.80. However, please keep in mind that the figures used here are only for illustration. This is neither a recommendation nor a part of any particular trading system.

If Done Orders

“If done” order is a particular type of order that will allow you to activate an order only after another order is filled. For instance, if you place a limit order to enter a CFD in the evening with a CFD broker who allows orders to be placed after the market is closed, in that case at the same time you may also want to place your stop loss order. However, until you actually enter the position you don’t want that stop loss order to be activated. This is when you can set up a limit order to enter a CFD-the one which is already places and waiting to be filled. After that you can place a stop loss order as well. However, it will be linked with the first order as an “if done order”.

Different CFD Providers May Execute Orders Differently

You need to keep in mind that not all CFD providers execute the orders in the same way. For instance, some providers might require that before your stop loss is filled a sufficient amount of underlying stock is traded at your stop loss. On the other hand, some providers might require only that the underlying stock was traded at the price to exit the CFD. Some providers also go for weighted average in case there is insufficient amount at a particular price level.

You need to check out the websites of the brokers to get detail information about their process of handling the orders. If you don’t find enough information in the site, then you can always call them or use email or online forms to directly contact with the CFD providers.

What Happens When A CFD Goes Ex Dividend?

Total Trader — Mon, 23 Nov 2009 00:29:43 +0000

How do CFDs trade when stocks go ex dividend?

It is useful if you understand how stocks trade around the times when a dividend is paid. There are 3 key dates associated with dividend payments on stocks. Working backwards these are the payment date, the record date and the ex dividend date. Fortunately with CFDs there is only one date that is relevant and that is the ex dividend date.

Dividend Trading and Stocks

If you purchase the stock before it goes ex dividend you receive the dividend, but buying the stock on the ex dividend date will result in you receiving no dividend at all. The record date is 3 trading days later than the ex dividend date. You must be the registered owner of the stock on this day to receive the dividend.

On the ASX it takes three days until a purchase is recorded at the registry so there is 3 days between the ex dividend date and the record date.

The final date is the payment date on which the dividend cheque is actually posted to the investor. There can be a significant delay from the record date to the payment date.

CFDs – Its All About The Ex Dividend Date

When you are trading Contracts for Difference (CFDs) the only date of any importance is the ex dividend date as all three dates that apply to stock investors blend into one. If you have bought the Contract for Difference (CFD) then on the ex dividend date you receive a cash payment equivalent to the amount of the dividend. If you are short a CFD, by selling it you will have an amount equal to the dividend payment deducted from your account on the ex dividend date. These payments are deposited or withdrawn from your account automatically.

Trading With No Risk

There is a possible zero risk strategy where you could buy the CFD just 1 day before the CFD goes ex dividend and sell it after to pick up the dividend. This would appear to be risk free. This strategy does not work because the stock usually falls by the amount of the dividend payment on the ex dividend date. This cancels out any gain you received from the dividend. And the reverse strategy of short selling a CFD before the ex dividend date to profit from the drop in value of the stock comes at the cost of the dividend being deducted from your account. There are no tax benefits available when trading Contracts for Difference (CFDs) for dividends as the franking credits are not available to CFD traders.

The Ex Dividend Date and CFDs

On the ex dividend date you would expect the stock to drop equal to the dividend payment. If you own a CFD you will get the dividend payment in cash. If you have sold a CFD and are short you will pay out the dividend amount in cash.

Source: Jeff Cartridge

CFD Finance Revealed

Total Trader — Thu, 19 Nov 2009 10:43:08 +0000

CFD finance is relatively simple to understand, if you understand the whole process of trading a CFD. When you buy a Contract for Difference (CFD) you are only required to provide a small margin. This margin requirement is required to cover any loss you may make on a position and changes from day to day as the value of the underlying position changes. The small margin that you pay does not cover the cost of the underlying instrument.

To hedge your position the CFD Provider will buy the underlying stock when you enter a CFD and to do this has to front up with the full purchase price. In effect the CFD Provider is lending you the cash while you hold the CFD position open.

CFD Finance when Buying CFDs

When you short sell a CFD you get paid straight away for the position you sold. You do not see the money directly in your bank account, but the CFD broker does receive the cash if they sell the underlying instrument.

So selling 1000 CFD contracts of CBA at $33 would mean that you would receive interest on $33,000. This is how CFD finance works when trading short.

Costs Of CFD Finance

Interest rates vary from provider to provider but are usually based on the following formula. A reference rate of interest plus a margin of 3% for long positions and a reference rate of interest less a margin of 3% when trading short. The reference rates used are typically the Reserve Bank of Australia (RBA) rate or the London Interbank Offered Rate (LIBOR).

The CFD provider is therefore making money on the interest margin that they take on each position. This is how CFD finance works for the provider and CFDs could be regarded as a sophisticated way to lend money.

When Is CFD Finance Charged

CFD finance is not calculated on positions that are entered and exited on the same day. Interest is only charged if a position is held overnight. So intraday positions are excluded from CFD finance.

The rate of interest is very low relative to the impact of movement in a CFD position. With current interest rates at about 6% per annum fluctuations in the CFD position can easily be more than this in a day.

High Probability Trading with CFDs

Total Trader — Wed, 18 Nov 2009 11:24:14 +0000

Many traders are seeking high probability trading strategies for trading CFDs. The attraction of these strategies is obvious as the more often a strategy is correct, the easier it is to trade.

It is not necessary to endure long periods of losing trades, drawdown in account balances is less and the leverage of CFDs does not have the same impact on an account.

However traders seeking high probability trading strategies may be missing the whole point of trading.

“Its Not About Being Right”

It is not just the win% that makes a trading strategy work, it is a combination of the win% and the risk reward. Looking at only one of these measures in isolation is a sure way to fail.

Assuming you had developed a strategy that was right on 95% of the trades. When it won it made an average of $100. If you were to make 100 trades you would expect to make $9,500 on the winning trades. Do not forget the losing trades however.

On the losing trades if the average loss is $2,500 then overall it will lose $12,500 from 100 trades. This strategy is not profitable even with a win% of 95%. It is important to remember that both numbers, risk reward and win%, need to be considered together.

“You Will Still Have Losses”

The strategy that is often used to get high probability trading strategies is to use wide stop losses and small profit targets.

So for a while the strategy appears to work well, until it gets hit with a number of very large losses. To reduce the size of the loss it is necessary to tighten the stop, but this typically reduces the success rate of the strategy.

Find the Balance

Back testing can be used to determine the optimal balance between risk and reward and the win%. Try testing a variety of different stop loss levels to determine the best outcome for risk reward and win%.

In my own trading I have tested a variety of chart pattern breakouts. The best trades breakout and keep going in the direction of the move. Because of this tight stops work well with chart pattern breakouts as they improve the risk reward results. Profit targets on the other hand improve the win%, but actually reduced the overall profitability.

“It Is About Making Money, Not Being Right”

A trend following strategy is right around 30% of the time, but when it does win it wins big, with a risk reward of 3 or more. This is a profitable trading strategy.

A short term scalping strategy that wins 70% of the time with a risk reward of 1:1 is also profitable.

When assessing trading strategies it is not about being right, but about making money that is important. High probability trading strategies may or may not deliver you this result.

Using CFD Mastery to Hedge Your Share Portfolio

Total Trader — Tue, 17 Nov 2009 03:52:58 +0000

So what is a CFD?

Essentially, it is like a margin loan on steroids. When you take out a margin loan to buy shares, the idea is that the lender will accept your shares as collateral and loan you further funds to purchase more of the same shares, thus leveraging your capital so that you receive the benefit of the price movement and dividends from a greater number of shares than you would ordinarily be able to afford.

Because your investment is only 5 percent and the other 95 percent (the ‘difference’) is effectively loaned to you, with interest charges, the leverage is huge. If you’re able to predict the short term movement of a share price with a high degree of accuracy, it can result in some serious cashflow.

You BUY CFDs if you think the share price will rise – and pay interest on the difference. You SELL CFDs if you think the price will fall and receive interest on the difference.

But what if you’re not interested in trading CFDs? Do they have any other uses? Absolutely! You can use them to hedge your existing share positions against price falls.

Let’s use an example to illustrate.

But if you had ’sold’ 5,000 CFDs to the market at the same time as your share purchase, at 5 percent margin, this would’ve cost you an extra $5,000. When the share price dropped from $20 down to $12 the value of those CFDs would have increased by $40,000, thus offsetting the capital loss on your shares. Because you SOLD the CFDs, you would also receive interest on the remaining $95,000 that you have effectively ‘loaned’ to the market, for the period during which you hold them. You have just used CFDs as a form of insurance against loss in value of a significant asset.

The beauty of using CFDs to hedge against capital loss, is that, unlike options or futures, they never expire. So your ‘insurance’ investment is a one-off payment for as long as you hold the shares. What’s more, you can also retrieve your initial outlay, plus or minus profit/loss, at any time. For example if, after holding the shares for a few years, the price was still only $20, you could sell the shares for the amount you paid for them and at the same time, close out your CFD position and receive your original $5,000 back. In the meantime, you’ve received tax effective dividends or bonus share issues etc, risk free.

Now, let me tempt you with a little thought. Say you used a margin loan to purchase your XYZ shares so that you can now buy 10,000 instead of 5,000 shares. Then you would sell 10,000 CFDs to the market at a cost of $5,000 to hedge your new position. So now, you receive dividends and other benefits of share ownership for twice as many shares – all risk free.

How To Select A CFD Broker

Total Trader — Mon, 16 Nov 2009 06:12:29 +0000

There are lots of CFD brokers that you can choose from. To select a CFD broker there are a few factors that can help you to narrow down the field.

CFDs can be traded three different ways:

Market MakerDirect
Market Access (DMA)
ASX CFDs

When using the market maker execution model orders are placed and traded with the CFD broker. The Broker may then hedge their position by entering the same trade in the underlying market. They do not necessarily enter every trade that their client’s do.

Direct Market Access orders are not traded with the CFD provider, but instead are traded on the physical exchange. Your CFD order is filled when the order on the underlying exchange is filled.

ASX CFDs use a central order book in much the same way as stocks are traded. All orders are placed into the order book and the ASX computers execute the trades by matching together buy and sell orders.

Step 1 for Choosing a CFD Broker

Which markets you want to trade will go some way to determining which execution model you choose. Currencies, shares and indices are all traded via the market maker model. ASX CFDs also offer a limited choice of these underlying instruments as well.

To trade during the auctions at open and close you will have to use either DMA execution or ASX CFDs. The market maker model does not allow you to participate in the opening and closing auctions. When you place an order with ASX CFDs or you use the DMA model you will see your orders appear in the underlying security. If this is important to you then opt for one of these forms of execution.

Source: Jeff Cartridge

Stocks/CFDs on Total Trader

Total Trader — Mon, 26 Oct 2009 02:17:14 +0000

Investors are increasingly looking to Contracts for Difference

CFD Trading

(CFDs) as a more flexible method of trading stocks online.

CFD trading is carried out on live prices on Total Trader’s online
trading platforms, without the delays of normal stock trading,
such as waiting for fills from the stock exchange.

CFDs are more flexible method of trading stocks online and investors are increasingly looking to it.

Investors are increasingly looking to Contracts for Difference (CFDs) as a more flexible method of trading stocks online.

Stock/CFD Exchanges Available

Americas
US – American Stock Exchange, NASDAQ Capital Market, NASDAQ Global Markets, New York Stock Exchange, Other OTC on NASDAQ (Pink Sheets)
Canada – Toronto Stock Exchange

Asia Pacific
Australia – Australian Stock Exchange Ltd.
Hong Kong -Hong Kong Stock Exchange
Japan - Tokyo Stock Exchange

Europe
UK – London Stock Exchange
Switzerland – Swiss Exchange, Virt-X
Germany – Frankfurt /Xetra Stock Exchange
Italy – Milano Stock Exchange
Denmark – OMX Copenhagen
Plus more than 10 other European exchanges

Index CFDs

Trade over 15 Index-tracking CFDs across over 20 exchanges worldwide with a single click. Additionally index-tracking CFDs trade on live prices without needing to subscribe to live pricing.

Index-tracking CFDs are the easiest way to gain exposure to global stock markets whether taking long or short positions. Index-tracking CFDs are linked to the performance of a stock index which allows investors to easily diversify investment risks. These index-tracking CFDs can be short sold, opening up the possibility of turning a profit in a falling market.

DMA CFD Trading – Direct Market Access

Designed to cater to the professional trader and investor, we offer CFD Exchange DMA on most global exchanges. CFD Exchange DMA gives Direct Market Access to the exchange order book on real-time CFD prices. This means a trader can combine the benefits of trading direct on an exchange with the leverage of margin-traded CFDs.

With DMA CFDs, traders get direct access to the exchange order book and can place trades directly around the live market depth. CFD Exchange DMA is a leveraged product, allowing for increased market exposure, while short selling is also a possibility.

Live Market Prices - Costs & Rebates

By default, clients have access to delayed market data on the equities and futures exchanges on which they are enabled to trade. To receive real-time market data for stock, CFD, CFD DMA or futures trading, clients will have to subscribe to the individual exchanges. Clients will incur a small monthly subscription fees for the data they elect to receive in real time. An Online Subscription Tool is available on the live trading platforms.

Data fee rebates for active equity trading clients.
For equities clients that subscribe to real-time market data, we have introduced a data fee rebate scheme where fees are rebated per exchange should clients trade the minimum number of times across both stocks and CFDs during each calendar month. Rebates are only applicable for non-professional equities clients subscribing to level-1 data. The definition of Non-Professional and Professional subscribers may vary by exchange.

Learn CFD Trading

Eden — Fri, 25 Sep 2009 01:59:14 +0000

CFDs have taken the trading world by storm. Now take advantage of this revolution and learn CFD trading yourself. CFDs offer the trader access to leverage your returns. A deposit of just 5% will allow you to trade at leverage of up to 100 times. An investment of just $100 allows you to trade up to $5,000 of a commodity, index or stock. I do not recommend people using the full amount of leverage.

Multiply Your Returns with Contracts for Difference (CFDs)

A small profit can be multiplied up using leverage. If you bought 1000 Microsoft at $29.00 you would normally have to spend $29,000. If you then sold Microsoft at $32.00 you would make a profit of $3,000 which is 10.3%.

If you choose to trade CFDs you can use a small deposit, just 10% of the stock value. In this case it is $2900. Exiting at $32.00 delivers a gain of $3,000, but is a dramatic improvement in terms of percentage gain to 103%.

Risk Management Is Important With CFDs

But not every trade goes as planned and it is important to learn how to manage your risk when trading CFDs. The market is a good teacher and you will learn this one way or another. When you trade CFDs you will know how important it is to understand and know the risks before you enter a new trade.

Profit When the Markets Fall with Contracts for Difference (CFDs)

Once you understand CFDs you will know how you can profit in a falling market environment. No longer do you have to sit and wait for the market to come back, as the market falls it offers opportunities on the short side as well as the long side. Contracts for Difference (CFDs) are easy to learn and far less complicated to trade than options or warrants.

Trade When You Choose with CFDs

CFDs are available for a wide variety of markets from commodities to indices and stocks . With such a wide selection of markets there is something to trade 24 hours per day. So pick a market to trade that works in with your schedule.

Source Jeff Cartridge

Contracts for Difference (CFDs) and Tax

Eden — Thu, 24 Sep 2009 04:09:28 +0000

The Australian Tax Office (ATO) was not prepared for the launch of CFD Trading in Australia and had no specific legislation addressing the taxation of CFDs. Initially any gain was treated in a similar way to gambling, but it soon became obvious that the ATO did not see CFDs the same way as gambling. Legislation was quickly drafted to address the taxation of CFDs.

Get Professional Advice

It is important that you consult your own accountant or tax adviser when it comes to tax time. Everyone’s financial situation is unique and the general guidelines here may not address all aspects of your tax situation. This is a guide to the interpretation of legislation regarding CFDs in Australia.

Income from CFD Trading

Any profit made when trading CFDs is treated as taxable income, and any losses made reduce taxable income. So the income for tax purposes is the net income calculated by adding up all your profits and taking away all your losses.

Deduct Your CFD Related Expenses

Any expenses associated with trading CFDs can be tax deductible. This includes costs like internet fees, any interest, brokerage or trading platform charges. These can be claimed to reduce your taxable income.

Capital Gains Tax and CFDs

While it would be highly unusual for a CFD trader to hold a position for 12 months or more, capital gains tax discounts do not apply to Contracts for Difference (CFDs). Franking credits also do not apply to dividends received while holding CFDs and no tax benefit is available for franking credits.

Final Word On CFDs and Tax

While it is vital for you to know your taxable situation this is not the reason to trade CFDs. It is not a wise investment decision to lose $1 to save 30 cents.

Source: Jeff Cartridge

Learn CFD Trading To Join The Trading Revolution

Eden — Wed, 23 Sep 2009 02:12:04 +0000

Now is the time to learn CFDs and revolutionise your trading. CFDs have shaken the trading world up and allow you to leverage your returns. Now for the first time with as little as a 5% deposit you can trade on leverage. That means you can use $500 in your CFD account to trade as much as $10,000 worth of an index, share, stock or a commodity.

Amplify Your Results with Contracts for Difference (CFDs)

By taking the opportunity to learn CFDs you can buy 1000 contracts for $1,450 which is a deposit of just 5%. Assuming you sold at $32.00 you still make the same gain of $3,000. In percentage terms however your gain has increased dramatically to 206%. This is possible if you learn CFDs.

Learn to Manage Your Risk with CFDs

Leverage can work against you as well and when things go wrong it can be costly. It is better to learn to manage your risk before you begin trading rather than learn it the hard way in the market. Make sure you know the risks that exist when trading CFDs.

Profit In Falling Markets

When you learn CFDs you will know how you can profit in a falling market environment. No longer do you have to sit and wait for the market to come back, as the market falls it offers opportunities on the short side as well as the long side. Contracts for Difference (CFDs) are easy to learn and far less complicated to trade than options or warrants.

Choose When You Want To Trade

CFDs can be traded on almost any market in the world which offers you the opportunity to trade when you choose. There are markets trading 24 hours a day so there is certain to be a time that works in with your schedule.

Source: Jeff Cartridge

International Stock Market Snapshot

Eden — Tue, 22 Sep 2009 02:01:37 +0000

Below we provide our unique trading range charts for 21 major country indices. For each index, the light blue shading represents between one standard deviation above and below the 50-day moving average. When the price is within this trading range, it is considered to be in “neutral” territory. The red zone represents between one and two standard deviations above the index’s 50-day moving average. Moves into or above the red zone are considered “overbought.” Moves into the green zone (more than one standard deviation below the 50-DMA) are considered “oversold.”

With the exception of a few Asian countries, most indices shown below are trading into overbought territory. China’s Shanghai Composite is the only index trading below its 50-day moving average. Australia, Brazil, South Korea, Taiwan, the UK, and the US look to be the most overbought of the bunch. After trading in perpetual downtrends for nearly all of 2008 and the first few months of 2009, most countries have now been trading in solid uptrends for five months now, with only a brief pullback here and there. Brazil, China, Hong Kong, India, Malaysia, Mexico, Singapore, Sweden, Spain, South Korea, and Taiwan have all taken out their 52-week highs in recent months, while the rest still have a bit further to go.

Source: Bespoken Research

Avoiding CFD Risks, The Path To Trading Success

Eden — Mon, 03 Aug 2009 23:37:50 +0000

The main CFD risks is the impact of leverage when trading CFDs. With leverage available up to 10:1 you can make a lot of money very quickly and also lose a lot of money very quickly.

Stops Can Control Your Risk

Stops work very well to limit your CFD risk. Place your stop at a price that will control the loss per contract to an acceptable level. This is an effective way to manage your risk.

Too Big, You Loose

By placing your stop at a predetermined level the amount you lose will now depend on your position size. The more contracts that you hold the more money you will lose if the trade goes wrong. This is the second CFD risk that you can manage. With 30 cents at risk the number of contracts will determine your gain or loss. 100 contracts would give a loss of $30, 200 contracts would lose $60 and 1000 contracts would lose $300. Bigger positions, say 10,000 contracts would lose $3,000. Correct position sizing is an important aspect of controlling CFD risk.

A Gap Away From Disaster

Most Destructive CFD Risk

Managing your risk is the key to your success and profiting from CFDs.

Source: Jeff Cartridge

3 Essentials Rules to have CFD Trading Success

Eden — Thu, 30 Jul 2009 00:46:57 +0000

It takes just three things to trade CFDs successfully.

1. Manage your risk.

2. A profitable strategy

3. Follow the rules

Stops Are an Important Tool

Place your stop orders into the market to manage your risk. This is an essential part of CFD trading success.

If you have followed the markets as they trade you will be aware that the market can move very rapidly. A stop in the market will take you out at what you are will to risk on the trade.

With CFDs it is possible to lose more than you have in your account, because if you use to high of leverage and the market gaps down on open it is possible to have your stopped jumped and you will be closed out of the position at a loss that is bigger then you designed. so it is vitally important that you be prudent with your leverage.

A Profitable Strategy Wins Hands Down

It is vitally important that you have a profitable strategy to follow. This is an essential ingredient in successful trading. There are a wide variety of strategies available for you to trade and it is important you find one you are comfortable with.

As a start the strategy must be profitable in history. There are many programs available that allow you to test your trading ideas out to see whether they work or not. But just because a strategy works in history, does not mean it will work in real time.

Most traders do not follow a profitable strategy and as a result do not achieve the results they wish to. Following the market movement will have you buying at highs and selling at lows. Before you start trading make sure you know what your strategy is and that it works.

The discipline to stick to your strategy can take time to develop. It is not always easy to do this.

Every strategy will come into tune and go out of tune at different times. When your strategy is not in alignment with the market conditions you must be prepared to cope with this. It is important to recognise whether this under performance is temporary or permanent.

If the strategy is experiencing a losing streak that is beyond normal, it becomes time to stop trading and protect your capital.

Following your trading plan can be very difficult, just like following an exercise plan can be difficult to do.

Mastering these three tips to trade CFDs successfully can take some time, but the rewards are well worth the journey. Enjoy the trip.

Source: Jeff Cartridge

Commodity Snapshot 28-7-09

Eden — Mon, 27 Jul 2009 23:23:08 +0000

Below we provide our trading range charts for ten major commodities. The green shading represents between 2 standard deviations above and below the commodity’s 50-day moving average. Moves outside of the green zone are considered overbought or oversold.

The only commodity currently overbought is copper. Oil, natural gas, gold, silver, and platinum are all right in the middle of their trading ranges. Corn and wheat have been tanking lately and are getting close to the bottom of their normal trading range. And coffee and orange juice are finally seeing some reversion to the mean after seeing some short-term divergence a couple of weeks ago.

Source: Bespoken Research

Market ‘Noise’: How Seasoned Traders Learn to Ignore It

Eden — Mon, 27 Jul 2009 02:36:40 +0000

For many years I was a futures market reporter. I spent time working right on the futures trading floors in Chicago and New York. Most of the time my daily reporting “beat” involved interviewing traders and analysts and then writing three daily market reports. For months at a time I would cover the same markets, day in and day out. It was a fantastic learning experience and an opportunity that very few get.

One thing I eventually discovered from covering the same markets day after day, month after month, was that the vast majority of the time the vast majority of the markets’ overall fundamental and technical situations did not change on a day-today basis. Yet, as a market reporter I was conditioned to write about why the market went up one day and why the market went down the next day, and so on.

Even though a market may have been in a very narrow trading range for days or weeks, I had to ask the traders and analysts every day to come up with some fresh fundamental and\or technical reasons why that market moved only a fraction. Reporting on the New York “soft” futures markets (coffee, cocoa, sugar, cotton and orange juice) is especially difficult for a reporter. He or she needs to dig up and write about some fresh-sounding news every day. The soft markets many times just do not have much fresh fundamental news on a daily basis — or sometimes even on a weekly basis, for that matter. Conversely, it was easier covering the financial and currency markets because there was usually at least one government economic report that came out every day that would make those markets wiggle a bit. Or, some government official (like Greenspan) would make comments to which those markets took notice.

As time went on and I came to better understand markets and market behavior, and as I studied specific trading strategies, I realized that the day-to-day market “noise” is not of much use to most traders. Here’s a specific example of market noise:

Recently the live cattle futures market was up a bit on a Monday due to talk that the cash cattle trade later in the week would be at higher money. On Tuesday the futures market dropped a bit because of ideas the cash cattle market trade later in the week may not be at firmer money, but steady at best. Nobody was trying to manipulate the live cattle market that week. It was just a case of differing opinions getting center stage when the market closed on different sides of unchanged.

For a trader who tries to follow the near-term fundamentals in a market too closely, hearing that kind of conflicting news can be a nuisance at least, or a factor that prevents successful trading results at most. It’s not easy for less-experienced traders to ignore the differing daily drumbeat of fundamental news that is reportedly impacting a market.

The lesson here is that prudent traders should not become overly sensitive or reactive to most of the day-to-day fundamental news events that are reported to be moving the market on any given day. What is important for the trader is that he or she recognizes and understands the overall trend of the market, and that daily market “noise” is usually an insignificant part of the overall process of trading and of market behavior, itself.

CFDs Versus Stocks And The Winner Is!

Eden — Mon, 27 Jul 2009 01:40:19 +0000

CFDs are cheap to trade and this attracts traders to CFDs when they make the comparison of CFDs versus Stocks. Using a small amount of capital to trade a much larger position is very attractive to a trader moving into CFDs after trading stocks There is nothing new to learn when it comes to the pricing of CFDs as they mirror the underlying stock prices.

Benefits of CFDs

CFDs have a wide range of advantages over stocks as a trading instrument especially for the active trader. Brokerage costs are low, you can trade with other people’s money, because a small amount of capital controls a much larger position when trading CFDs. Leverage means a small move in the underlying stock can result in a much larger gain in the CFD position.

While CFDs may seem daunting at first trading them is actually very simple. Short selling with CFDs is one of the major strengths so now you can profit if stocks fall.

Getting Started with CFDs

So what does it take to get started, just complete an application, submit it and send it with proof of who you are. With fantastic upside there comes the potential for downside as well. Manage your risk to ensure your survival and profitability. Make sure you have sufficient capital to begin trading CFDs, $5,000 would be recommended.

Alternatives to CFDs

Options, futures or even currency trading may be valid alternatives to trading CFDs. Options are by far the most flexible trading instrument available, but CFDs are far superior when it comes to being easy to trade. You do not have to trade $25 a point with Contracts for Difference, like you do with futures, as one contract is usually equal to $1 a point.

CFDs have many advantages for the active trader when it comes to choosing CFDs versus Stocks.

Try Total Trader’s CFD Trading Platform.

Source: Jeff Cartridge

Toronto Stock Exchange – Canadian Stocks & CFDs Available

Total Trader — Wed, 01 Jul 2009 00:25:12 +0000

Total Trader has added Toronto Stock Exchange (TSX) stocks and CFDs to the trading platforms.

CFDs available now! Total Trader has 180+ of the largest Toronto-listed stocks available as CFDs now. For a list of the available CFDs, commission rates and margin requirements, please view the Trading Conditions in the platform and select Toronto Stock Exchange.

Try trading Canadian stocks and CFDS with a
Free Total Trader Demo Account

The Ability to Not Trade: An Unappreciated Contributor to Successful Trading

Eden — Mon, 22 Jun 2009 00:11:35 +0000

I compared the trader to a sniper, blending self-control with a high level of aggression and decisiveness. There is one other respect in which traders are like snipers: both engage in periods of intense performance activity punctuated by potentially long periods of inactivity.

The sniper may wait hours or even days in a hide, waiting for the perfect shot. Wet, cold, cramping, and simple boredom are the sniper’s greatest enemies. It is a rare individual who can keep still for extended periods of time and then function with the utmost skill and accuracy. How do they do it? Many keep themselves mentally occupied and active, even while they’re physically still.

One characteristic I’ve found among successful traders is that they function effectively when they’re not trading. When markets become very quiet and range bound, they occupy themselves with a variety of activities, from sharing ideas with peers to conducting research. Traders who do not tolerate inactivity well inevitably feel the need to trade, often when there is no objective edge present. For them, losing money is less onerous than experiencing boredom.

By structuring your non-trading time, you can be like the sniper: fresh in your thought and perception, even as you’re waiting patiently for the next opportunity. Reviewing markets and relationships, reviewing your performance, testing trading ideas, learning from and teaching others: there are many activities that make non-trading time productive.

If, however, your motivation is not to understand markets and develop yourself–if your motivation is to enjoy the thrill of risk and action–you will find non-trading time to be aversive. There are those who live to trade and there are those who trade to make money. Trading success is an expression of what you bring to markets; it cannot fill a personal void.

Source: Brett Steenbarger

Oil Up 99% In 75 Trading Days

Eden — Tue, 02 Jun 2009 23:37:11 +0000

Oil has rallied more over the last 75 trading days than it did at any time during its entire bubble run from 2001-2008. In fact, its current rally of 99% since the February 12th low is nearly double the highest 75-day rally during the last oil bull (From December 2001 to April 2002, oil rallied 55% over 75-days.) Oil has also gone from $33.75 to $67.75 in just 75 trading days. During the 2001-2008 oil bubble, it took 409 trading days to complete the same task from January 2004 to August 2005. While many investors are arguing that oil’s rally is a good sign for the global economy and equity markets, let’s hope it doesn’t keep up the pace, or else we’ll be right back to $150 in no time.

Source: Bespoken Research

CFD Trading And How It Compares To Trading Stocks

Eden — Tue, 26 May 2009 06:44:52 +0000

So which is better? Stocks or CFDs?Well, there is no one clear cut answer, but there some differences between shares and CFDs that you should be aware of to see it CFD trading is suitable for you.

As well as advantages, there are disadvantages to CFD trading that you should be also aware of, so that if you can overcome them, then CFD trading may be a profitable trading instrument.

Firstly, let’s have a look at two main reasons why CFDs are advantageous over trading stocks and shares on the stock market.

1. The use of leverage.

With CFD brokers and providers, there is 10 to 1 or 20 to 1 leverage available. This means that you can magnify your returns by 10 fold or 20 fold. The advantage of this? You can make more profits with a smaller float.

But the disadvantage of this is that if you do not have a good CFD system, or don’t know what you’re doing, then you can lose more than your float.

For example, if you buy $10 000 worth of CFDs using $1000 cash margin, and the stock CFD price goes down by a huge amount say 90% of its value and you haven’t exited, then the loss is $9000, which is way bigger than your $1000 cash margin you’ve put up for just that one trade.

So your results are bigger, so you must trade with good money management.

2. You can short more stocks when trading CFDs rather than stocks.

This means more buying and selling opportunity, so if your system is profitable over bullish as well as bearish markets, then you can take advantage of the market as it goes up or down.

Now let’s have a look at two main disadvantages of CFD trading.

One is the effect of leverage which can be good or bad thing depending on your trading system, which we talked about above. But let’s have a look at two more.

1. When dealing with a market maker type CFD provider, rather than a DMA (Direct Market Access) CFD provider or broker, then you have to deal with issues such as spread widening (if any) and slippage. Even if you use DMA CFDs, but you trade illiquid stocks then you may get slippage due to the market: that is, not enough liquidity in the underlysing stosk to get out at the expected price.

This means that if the provider executes your stops in such a way that there is a bit of a delay getting out of a CFD via your stop loss (set at say $4.75), then instead of getting out at $4.75, you may have gotten out at $4.60, which means that you would’ve have gotten out with less profit than you expected. This is called slippage.

Sometimes a marginally profitable trade can become a losing trade due to slippage.

Also, market maker CFD brokers may widen the spread more than their usual small smounts of 0.05% or whatever amount they normally have in certain times of the day, so that when you get in or out of stocks, you may get a price that is different to the one you expected.

You just have to monitor your results with your trading. This is even more so if you trade relatively illiquid stocks. You may need another source of data and ‘course of trades’ (prices and volumes) to compare.

2. There are limitations to how much you can scale your trading up depending on the market.

With CFDs in a market with high liquidity, there is less liquidity issues with the majority of CFDs.

But if you’re trying to put on large trade sizes in a CFD market that is relatively small, liquidity issues may cause it’s own slippage.

So, when trading CFDs, be aware of these pros and cons.

As with everything, there is probably no ‘perfect’ instument to trade.

But if you know what the pitfalls are, then you can overcome them to some extent by either redesigning your system or finding a different CFD provider.

Source: The CFD Trader

ASIC Lifts Ban On Covered Short Selling Of Financial Stocks

Total Trader — Sun, 24 May 2009 23:50:03 +0000

Shorting ban on Financials lifted – Can short as of today

The Australian Securities and Investments Commission said Monday it will lift its ban on covered short selling of financial stocks from 0000 GMT Monday.

“ASIC has reviewed market conditions and considers that the balance between market efficiency and potential systemic concern has now moved in favor of the ban being lifted,” the regulator said in a statement.

“In reaching this view, however, ASIC notes that the global financial crisis and global recession continues to place pressure on Australia’s markets,” it said.

“ASIC will not hesitate to reimpose the ban immediately and without consultation if it considers market conditions warrant such action,” the regulator said.

It will pay particular attention to short selling activity by market participants, including hedge funds, which could potentially harm Australia’s financial system.

The ban was put in place on Sept. 21, 2008, in the wake of the collapse of U.S. investment bank Lehman Brothers.

Equities, Gold, Silver and Oil – Active Trader Report

Eden — Thu, 21 May 2009 23:10:33 +0000

The broad market has been moving higher with great force the past 2 months. I have been expecting a top for the past 2-3 weeks. It looks like the market is starting to come in (sell off).

Few quick points which I think are interesting:

Gold started to sell off about 10 days before equities rallied as money was pulled from the golden safe haven and rotated back into stocks. Now gold is moving higher and the broad market is starting to roll over.
I find the broad market moves in 6-8 week cycles and it looks like the market peaked last week (week 8).
Looks like we had some capitulation volume during the top last week and big selling again today as equities tested the high.
Trading inverse etf funds I find are the best way to take advantage of this possible setup. Members will be able to profit from the lowest risk setup I can find.

The Gold Sector

Gold had a nice move higher today with fears of inflation, the broad market correcting and the USD which is dropping like a rock. I have provided a few charts to help you get a better view of what’s happening and how I see things.

The Bullish Percent Index of Gold Miner Stocks

This chart tells us the percentage of gold mining stocks which are currently on a point and figure buy signal. Currently 80% of gold stocks are in a bullish chart pattern and the good news is that we can still see this chart move to the 90 and even 100 level.

I like to watch this chart for short term over bought or over sold levels which occurs when this chart is in the Wave Top or Wave Bottom Zones. This allows me to tighten my stops to lock in short term profits.

Gold Stocks Price Action

As you can see from the chart below, gold stocks broke out of their trend channel this week. It will be exciting to watch and see what happens over the next few days. This type of price action is what the broad market did in March and April. As prices break through the top trend line we could very well see a jump in prices as investors panic and buy into gold stocks so they do not miss the next move.

Gold GLD Active Trading Chart

Gold looks like it wants to run higher but it will find resistance at the upper channel trend line. If this price level is breached then I think we will see gold surge much higher.

Weekly View of Gold

Here is a quick look at the weekly chart of gold. It shows that prices may take a few months for gold to retest the $1000 level if the trend continues higher. The large reverse head and shoulders pattern looks very promising for higher prices as well.

Weekly Silver Active Trading Chart

This chart clearly shows the potential that silver has over the next few months.

Crude Oil Active Trading – Weekly Chart

Crude oil made a new 6 month high this week. Money has been flowing into commodities the past couple weeks as traders and investors try to protect them selves from the over bought equities market. This weekly chart and really most weekly charts generate clean buy and sell breakout signals.

TheGoldAndOilGuy Trading Conclusion:

I think gold and silver will do very well over the next couple weeks. Depending on how strong the pullback is for equities it will play a roll in the price of precious metals. If we get a really strong reversal and rally then I don’t think gold and silver will do as well.

Looking at oil it’s more difficult to say what could happen. If the equities market drops fast then I think it will pull oil with it as investors lose confidence and oil demand will continue to decrease.

We have some very exciting opportunities ahead of us and its important that we keep our risk low while taking advantage of current market swings using stocks, etf’s and commodities. My focus is to keep overall risk under 3% for all my trades and to add to winning position and cut losses quickly.

Source: Chris Vermeulen

Total Trader » CFD Trading

CFD brokers and providers: How to Select One

The choice of an online CFD broker is one of the keys to successful CFD Trading System.

These 7 points must be considered when choosing a CFD broker online:

Using CFDs to Hedge Your Share Portfolio

What are the subtle differences between trading CFDs and trading stocks?

CFD Trade Providers – Choosing the Best

Profit Using Contracts For Difference

Advantages of CFD Trading For Traders

Day Trading CFDs

Uncover the secrets to finding your best time frame

How big will your CFD wins be?

What you need to concentrate on when Day Trading CFDs

CFD Broker -Direct Market Access

Top 3 Reasons to Use a Direct Market Access Broker When Day Trading CFDs

1. No requotes

2. Speed of getting orders set in the market

3. Transparency

CFD Trading vs Traditional Share Dealing

Trade Futures With CFDs

Brokerage On Index CFDs – How Do CFD Brokers Make Their Money?

So the question most people ask is how can CFD brokers allow people to trade index CFDs commission free?

Trading Index CFDs

Free brokerage or $100 round trip?

Beware excessive overnight financing charges

Do CFDs Suck?

Leverage Is A Double Edged Sword

CFD Brokers Deliberately Hit Your Stops

Re-quotes Rip Off Traders

Trading Is Your Responsibility

Stock Vs CFDs

Cash, All or Nothing

What Happens When It Doesn’t Work?

The Cost of Doing Business

No Tax, Is That Possible?

CFDs vs Stock, The Winner Is

CFD Trading Introduction

What is CFD?

Benefits of CFD Trading

Leverage

Short Selling

Shorter Trade Times

Capability to Set-up Stop Losses

Trade in Evenings

Markets

No Stamp Duty

Trade Futures with CFDs

Compare CFD Brokers And CFD Providers

Avoiding CFD Risks, The Path To Trading Success

Stops Can Control Your Risk

Too Big, You Loose

A Gap Away From Disaster

Control your position size

Most Destructive CFD Risk

Aspects of CFD trading

These features include:

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Flexibility

CFDs can be traded long or short

Dividends and corporate actions

Reporting season

Product trading times

Lower brokerage costs

Instead Of Stocks, Trade A CFD

How a CFD Works

The Advantages:

Higher Leverage

Global Market Access from One Platform

No Shorting Rules or Borrowing Stock

Professional Execution With No Fees

No Day Trading Requirements

Variety of Trading Options

The Disadvantages

The Bottom Line

High Probability Trading Strategies Using CFDs

Trading Is Not About Being Right

You Will Still Have Losses

Balancing The Tradeoff

Make Money First, Be Right Later

A short term scalping strategy that wins 70% of the time with a risk reward of 1:1 is also profitable.

Leverage