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The ABCs of Trading Contract for Differences (CFDs)

If you are interested in starting to trade CFDs, you need to take time to come up with the best strategy for your trading style. The best way to find the best strategy is to learn of the best strategies for CFD trading. Trading strategies are market approach plans that ensure you only invest where you are likely to make profitable returns. These strategies also work to ensure you become a better trader and that you make more profit than you do losses.

The CFD trading strategy you settle for has to fit your attitude you have towards the markets you want to trade. The best strategy for your trade should also be one that suits your preferred trading time, technical knowledge and risk appetite.

In this article, you will find the most ideal CFD trading strategies you can use to trade in demo and live accounts on any platform.

Day trading strategy

The main principle of the day trading strategy indicates that traders should never leave any of their trading positions open after the closure of the forex market. This way, they can avoid the added cost and risk associated with holding a trading position overnight.

As a day trader, your main agenda should be generating quick profits from even the smallest price movements before close of business. Since it demands taking advantage of small market movements, day trading is only ideal for full time traders who can keep watch on the market chart all day.

Preserve Precious Capital (PPC) strategy

PPC is a capital preservation and money management CFD trading strategy for all traders and is the most important strategy to learn as a trader.

A common mistake traders make is getting too fixated on making money that they forget to preserve what they have invested.

In a PPC strategy, a trader learn skills they can use to protect the money they have invested in CFD markets. This is achieved by knowing which open CFD positons are more likely to make losses and trying not to investing in them. Instead, traders should focus on putting their money in CFDs with the likelihood of making profits. Learning how to pick the best CFDs is the ultimate way to preserve precious capital.

 Swing trading strategy

Swing trading heavily emphasizes on technical analysis of the CFD market. It requires a trader to find price patterns that offer the best short-term positions for trading.  As a swing trader, your whole trading agenda is focused on the price of the CFDs you are interested in trading. Generally, swing traders are less focused on the value of the asset when looking for the best assets to trade.

As a swing trader, you can hold different trading positions for several days. Typically, most swing traders hold position for longer than day traders do, but shorter compared to position trader.  As a swing trader, you are also at liberty to make trades against a trend if it presents a good opportunity based on your system analysis.

Position trading

This CFD trading strategy allows traders to hold specific CFD assets over the longest trading period, usually a few weeks or longer.

As a position trader, you can expect to make fewer CFD trades compared to day traders. In addition, every trade you make delivers a bigger potential for profits. However, your ability to enjoy these huge profits is dependent on your market timing. You need to know when to sell open CFD positions. Holding them for too long increases the possibility of significant losses just as they do for profits.

Scalping

This is a strategy used by a very short terms CFD trader, often refers to as a scalper. This involves trading CFDs just a few minutes before their positons close. A scalper’s strategy is all about trying to beat a bid-offer spread and skin for a profit that only spread over a few points before positon closing. To perfect your scalping strategy, you need to be good at reading tick charts.

Choosing the best strategy for your needs

If you are having a hard time deciding on the best CFD trading strategy to follow, you can employ the use of technical indicators. These make it easier for traders to come up with best strategies for their CFD trading needs. You can also employ different strategies on demo account to determine the best one for your trading needs.

 

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Essential Tips on Choosing the Right Forex Broker

You might have at one point in time considered forex trading, but the complexities surrounding the trade might have put you off. At first, you might be scared stiff by complex terminologies like currency quotes, lots, technical indicators, economic data, zones, pips, Forex charts, and more.

Forex trading is a learning experience that requires patience and lots of learning to grasp the fundamentals of the markets. Forex markets are markets where currencies are bought and sold depending on the value of the other currency.

It is necessary to evaluate yourself before entering into forex trade by analyzing whether you have the drive, courage, and focus of the trading activity. Additionally, be ready for the lies and tricks of fraudsters who abound in this trade.

With that background information, the first step is to open an online account with a broker. There are hundreds of online brokers, each claiming to be the best in the market, and this is where your first challenge comes to light. This article serves as a guide to choosing a suitable broker based on the following criteria:

Security

In this trade, you need guarantees that your money will be safe and sound and that the profits you will be earning are safe. Don’t be deceived by the appearance of the broker or scammer in that case. Even the presentation of a seemingly well-designed website doesn’t mean the owners are genuine.

What you need to look at is the broker’s track record, the registration documents, and certifications by relevant authorities.

Initial Deposit Requirement

Many a time, the broker would ask you for a deposit. While it is ordinarily safe for you to tread carefully and offer fewer amounts, it is not prudent as it amounts to undercapitalization. A genuine or serious broker would ask for adequate initial deposits bearing in mind that small amounts could be wiped out in case of fluctuations. The key here is to invest what you can afford.

Spreads

Spreads are what is payable to the broker regardless of the profits or loss. Therefore, choose the broker with competitive spreads.

Deposits and Withdrawals

Your savings and profits should be readily available for withdrawal at any time you want. Similarly, if you are not satisfied with the services of a broker, the broker must facilitate your closure with ease. For deposits, the broker should provide seamless services.

Margin Requirements and Leverage

When choosing a broker, go for the one with minimum leverage. A broker should gradually increase leverage as you gain experience in the markets. As a beginner, don’t go for a broker who will start your forex trade with maximum leverage. You are still learning the ropes, and you need to develop your skills as time goes by.

Trading Platform

Your choice of the trading platform should be tamper-proof so that no one tamper’s with trades. Go for easy to use platform to avoid issues when trading.

Customer Service

You are better off with helpful brokers who will handle your issues of system delays, deposits, and withdrawals. It is paramount that the customer service desk understands the techniques of trading. Read through website reviews of the brokers to establish if they are the right fit. If their reviews obtain complaints, bear in mind that their service is poor.

Account Types

There are several packages available. The best way to go about this is to choose one with customizable features and those with adjustable leverage and margins.

Currencies Offered

Choose a broker with a variety of tradable currencies on offer. In essence, the broker should offer a rich mix of currencies from the currencies of developing nations to the currencies of developed economies.

Forex Regulations

Forex regulating authorities depend on your country and locality. CFTC and NFA regulate commodity brokerage in the United States, The Australian Securities and Investment Commission (ASIC) regulates forex trading in Australia. The Swiss Federal Banking Commission (SFBC) is the regulatory body in Switzerland. Financial Services Authority (FSA) regulated Forex in the UK.

Your Take

Forex trade carries a high risk, and high degrees of leverage can work either way, and it is imperative to carefully consider your objectives before deciding to invest.

Whether to invest or not is your individual decision based on your risk appetite and leverage. On entry, you need the courage to overcome the emotional aspects of the forex trade.

There are many experiences that you encounter along the way before you become an established trader. There are lies and tricks of fraudsters to overcome in this business.

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The 4 Reasons for Copy Trading

Copy trading involves the use of a copy trading platform to mimic expert traders’ forex trades. Copy trading enables a follower to benefit from an experts’ trading strategies as they, more often than not, translate into successful trades.

Copy trading is open to any forex traders be they beginners or expert traders. There are several reasons why some forex traders copy trade. The following comprises the reasons for copy trading.

1.           Appropriate for Beginner Traders

Beginner traders are new to foreign exchange. They have no skills nor any understanding for performing foreign exchange trades. Most trades by beginner traders often flop. This can be very discouraging and may make beginner trader exit the market before they even get started.

Forex trade requires great trading experience plus skills. One has to read widely and practice consistently to get a grip of what forex trade is, and how best to go about it for profitable trades. A lot of forex tutorials and writings are available on the internet free of charge. A beginner trader ought to research and utilize online tutorials to sharpen their trading skills.

However, most times, beginner traders do not have the patience required to learn forex trade. They want to quickly jump into the trade and start making money as soon as possible. In that case, copy trading would be the most appropriate trading strategy for beginner traders to execute.

Copy trading does not require any special skills to execute. All the beginner trader can do is search through the forex market for expert traders study them to find out their rate of wins, and mimic their trades or trading strategies in their trades.

Moreover, as a beginner trader, you do not have to be there to observe the trades happen. You just pick the trades you want to mimic and signal your broker to place the trades for you.

2.           Generates More Money

Forex trade can be an alternative source of income. Very few people do forex trade for just the fun of it. Most forex traders trade because they need to make profits and expand their wealth.

Copy trading provides the opportunity to trade more and generate more profits. With copy trading, you do not need to perform any analysis of trade. Since you trust the trader whose trades you are mimicking, you are content with placing the trade and are confident of making a profit out of it.

Hence, you place more trades while copy trading, and most if not all of the trades turn out successful. Therefore, copy trading aids in generating more money than regular solo trades.

3.           Time-Saving

Forex trading can be very time-consuming, especially if you have to carry out an analysis before putting your money in a given forex trade. Forex analysis involves the use of fundamental or technical analysis tools to survey and analyze the forex market to find out whether the trade is worth investing in or not.

An analysis is mostly done when aiming at a particular level of accuracy in a trade. You have to do thorough research and collect data that you will require to perform an analysis. Also, you will require some tools to analyze the new trades.

However, with copy trading, the trades have already been analyzed and all you need to do is place the trades. If you must, the analysis you will carry out on a mimicked trade will be minimal compared to novel trades.

4.                 No Limitation to Who to Mimic

There are numerous copy trading platforms available online. All the trading systems or platforms provide access to thousands of forex trade options. The market is filled with many trading options than one may require. This provides the opportunity to make the best choice of trades to mimic from a pool of very successful traders.

Also, there is no restriction as to whom you can mimic. It all depends on your analysis of the successful trades and the choices you think will bring you exorbitant profits.

Conclusion

Copy trading is not a new trading strategy. Both new and experienced traders can implement it in their trades, given the benefits that follow it, such as more income generation and time-saving.

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Why do Novice traders fail to earn the Desired Profit?

Most of the people involve Forex trading for quick earning. It is the largest online platform for investors who want to make money independently. But earning money in this industry is not so easy. The traders have to follow and maintain a lot of rules and tactics for a better result in this sector. If you are a newcomer and want to involve this industry, then this article is undoubtedly for you. Because today we will discuss the common reasons for which the trades fail to gain desired success. The investors should be careful about the issues which are liable for inadequate performance in this sector. Read the article carefully, and you can make the right decision for a better career in Forex trading.

There are a variety of reasons behind losing money in Forex market. Most of the beginners fail to achieve the desired success because they start with no knowledge about this industry. There are a lot of things to know about Forex trading, and the traders should follow and maintain all of those issues. If that is not possible, the result will be negative. Let us start to discuss the reasons for failing to achieve desired success in this sector.

Not knowing the essential elements.

Most of the newcomers start their journey with almost zero knowledge. It is the main reason for failing. Because the traders do not know all the essential terms and terminologies for a smooth journey. They should study more and more for a better result. The professionals often suggest starting with a piece of minimum knowledge. Then they can overcome the difficulties easily. Know the essential knowledge and skills and then try in this competitive industry. And always use premium platforms like Rakuten trade as they offer quality trading environment to the retail traders. Never open the trading account with the low end brokers as you will not learning anything special.

Not avoiding the overtrading

Overtrading is another reason for failing in this sector. There are a lot of investors who think that taking part in multiple deals can help gain success quickly. But it is not true always. The traders can also lose money for taking part in numerous deals at a single time. If they want to be successful in their career, they should remove this practice from the list. Then the decision-making process will be more straightforward for them. Sometimes the traders want more money but making more money continuously is not possible for this industry. Try to manage the deals in a systematic easy and increase the success rate.

Feel the necessity of routine

Routine work will give the traders a smooth performance. They should select a routine for daily activities. Making a routine is also very important for maintaining different deals. But most of the newbies do not follow this rule, and they are unwilling to maintain the trading routine. As a result, they can face some problems. So, the newbies should always try to preserve and trading routine for the development of their performance.